Question

Cola Inc. and Soda Co. are two of the largest and most successful beverage companies in the world in terms of the products that they sell and their recelvables management practices. To evaluate their ability to collect on credit sales, consider the following rounded amounts reported in their annual reports (amounts In millions). Fiscal Year Ended: Net Sales Accounts Receivable Allowance for Doubtful Accounts Accounts Receivable, Net of Allowance Cola Inc. 2015 2014 2013 $30,819 $26,199 $27,444 4,388 3,723 3,051 39 46 42 4,349 3,677 3,009 Soda Co. 2015 2014 2013 $52,948 $38,732 $38,751 6, 377 4,624 3,694 135 81 61 6,242 4,543 3,633 Required: 1. Calculate the receivables turnover ratios and days to collect for Cola Inc. and Soda Co. for 2015 and 2014. (Use 365 days in a year. Do not round Intermediate calculations on Accounts Recelvable Turnover Ratlo. Round your final answers to 1 decimal place. Use final rounded answers from Accounts Receivable Turnover Ratlo for Days to Collect ratio calculation.) 2014 2015 Cola Inc. Soda Co. Cola Inc. Soda Co. Receivables Turnover Ratio Days to collect 2. Which of the companies is quicker to convert its recelvables Into cash?

I want to know the process of finding the results, any help appreciated, Thank you!

Answer 1

2020 1 In 2015 lola Inc :- Receivables Turnover Ratio - Net sales Average auounts receivable $300819 11 $4388+$3723 $3677 & $4349 Average auounts receivable of allowana) 2 (Net $8026 - $ 4013 $ 30819 7.7 times $ 4013 365 days 365 47.4 day. Days to collect 7.7 Receivables Turnover Ratio $4543 + $6242 - $5392.5 Soda Co verage auounts receivable 2 9.82 times $ 52,948 $5392.5 Receivables Turnover Ratio =

Days to collect 365 days 9.82 = 37.17 days For 2014 Cola Inc Average auounts receivables - $3009 + $3677 2 $3343 Receivables Turnover Ratio $26, 190 $3343 7.83 times 365 days 46.62 days Days to collect 7.83 Soda co. $ 3633 + $4543 Average auounts uceivables 2 - 9.47 times $ 4,088 $38,732 Receivables Turnover Ratio = $4088 365 days 38.543 days Days to collect 9.47

2015 2014 Soda Co. Cola Inc Soda o Colalna 7.83 times 9.82 times 9.47 times 7. times Receivables Turnover Ratio 38.543 days 47.4 days | 31.17 days / 46.62 days to collut Days 2) than Soda co is able to convert its receivables unto cash quicker cola Inc. as can be observed from the above table