To analyze the situation with the accounts receivable turnover ratio, we need to consider what could cause a decline in this ratio from 7.1 times to 5.6 times.
The accounts receivable turnover ratio is calculated as:
\[ \text{Accounts Receivable Turnover} = \frac{\text{Credit Sales}}{\text{Average Accounts Receivable}} \]
A decrease in the turnover ratio indicates either a decrease in credit sales or an increase in accounts receivable (or