Use Allarco Inc.'s financial statements to compute the accounts receivable collection period, and indicate whether the change from year to year is favourable or unfavourable. All the sales recorded in the income statement are on credit. For your analysis, assume that all other things have remained constant. Apply your analysis in very general terms.
All values should be accurate to at least two decimal places.

Allarco Inc.Income StatementFor Years Ended December 31, 2014, 2013, and 2012 201420132012

Sales$479,200$469,400$506,800

Cost of goods sold128,600119,300151,300

Gross profit from sales350,600350,100355,500

Operating expenses150,400177,800160,600

Income from operations200,200172,300194,900

Interest expense2,8502,7502,900

Income before taxes197,350169,550192,000

Income taxes23,40027,60028,000

Net income$173,950$141,950$164,000

Allarco Inc.Balance SheetDecember 31, 2014, 2013, and 2012

Assets201420132012

Cash$57,300$67,700$63,600

Short-term investments60,00051,00048,000

Accounts receivable, net37,50037,00034,100

Merchandise inventory46,10049,60049,600

Prepaid expenses4,8004,2005,000

Notes receivable, due in 20177,0007,0006,500

Plant assets, net311,000368,000307,000

Total assets$523,700$584,500$513,800

Liabilities and Equity Accounts payable$36,300$32,000$32,700

Salaries payable19,00016,40016,000

Income taxes payable15,35018,00020,900

Long-term note payable secured by mortgage on plant assets80,00085,00093,000

Share capital, 50,000

 shares160,000150,000150,000

Retained earnings213,050283,100201,200

Total liabilities and equity$523,700$584,500$513,800

Ratio20142013AnalysisAccounts receivable collection period (select one)

Answer rating: 100% (QA)

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