Advanced Lifestyle Ltd has stores in Auckland and Queenstown. The following information was taken from the 2016 financial statements, showing the results of its two divisions: 

Required

(a) Calculate for each division:

1. receivable turnover for 2016

2. average collection period for 2016

3. credit risk ratio for 2016 and 2015.

(b) As the Managing Director of Advanced Lifestyle Ltd, what conclusion can you make about the performance of the two divisions’ management in terms of their collection policy and credit risk? 

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(in NZ$ millions) Total sales Credit sales Gross profit Allowance for doubtful debts (2015) Allowance for doubtful debts (2016) Accounts receivable (2015) Accounts receivable (2016) Total current assets Auckland 1653 1498 215 7.2 10 152 197 322 Queenstown 1596 1388 174 6.2 5.2 128 120 285