Chapter 11
Financial Statement Analysis
550
b) In which year does Ellen Corporation have a better gross profit margin? Explain.
AP-6A (
5
)
Kingston Company sells on credit, with the balance due in 30 days. The company’s DSO ratio
has changed from 60 days last year to 42 days this year. Are things getting better or worse?
Explain the relationship between the sales terms and DSO.
