Polo Ralph Lauren Corporation designs, markets, and distributes a variety of apparel, home decor, accessory, and fragrance

Question:

Polo Ralph Lauren Corporation designs, markets, and distributes a variety of apparel, home decor, accessory, and fragrance products. The company's products include such brands as Polo by Ralph Lauren, Ralph Lauren Purple Label, Ralph Lauren, Polo Jeans Co., and Chaps. Polo Ralph Lauren reported the following (in thousands) for two recent years:

____________________________For the Period Ending

__________________________Year 2 __________Year 1

Sales ............................. $6,859,500 ........... $5,660,300

Accounts receivable .............. 690,000 ............... 592,700

Assume that accounts receivable (in millions) were $486,200 at the beginning of Year 1.

a. Compute the accounts receivable turnover for Year 2 and Year 1. Round to one decimal place.

b. Compute the days' sales in receivables for Year 2 and Year 1. Use 365 days and round to one decimal place.

c. What conclusions can be drawn from these analyses regarding Ralph Lauren's efficiency in collecting receivables?

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