Kapp Company has been a borrower at your bank for several years. You called on Mr. Kapp to receive his year-end financial statements. Looking them over hurriedly, you noticed that both sales and accounts receivable had increased by substantial amounts. You asked him what had caused the increase in accounts receivable, and he replied that, naturally, accounts receivable had risen because sales had risen. Which one of the following should you do to analyze this situation?
This is a single choice question. Selections are automatically selected as you use arrow to move.
a. Calculate how much any change in the company’s accounts receivable days on hand affected the year-end level of accounts receivable and how much the sales increase should have increased the year-end level of accounts receivable
b. Calculate how much any change in the company’s inventory days on hand affected the year-end level of accounts receivable and how much the sales increase should have increased the year-end level of inventory
c. Calculate how much any changes in the company's accounts receivable days on hand affected the year-end level of accounts receivable and how much costs of goods sold has increased the year-end level of accounts receivable
d. Calculate how much the company’s sales increase impacted the year-end level of accounts payable