Below are amounts (in millions) from three companies\' annual reports WalCo TarM
ID: 2342970 • Letter: B
Question
Below are amounts (in millions) from three companies' annual reports WalCo TarMart CostGet $1,715 5,666 529 $2,662 6,194 565 Net Sales $312,427 57,878 58,963 Required te the receivables turnover ratio and the average collection period for WalCo, TarMart and CostGet. (Do not round Intermediate c Round your "Average accounts receivable" and "Recelvables turnover ratio" answers to one decimal place) Recelvables Turnover Ratio Receivables turnover ratio WalCo TarMart CostGet 365 o times O times O times Average accounts receivable Net sales Receivables turnover ratio Collection Period Average collection period WalCo TarMar CostGet 0 days 0 days 0 daysExplanation / Answer
1.
Average accounts receivables = (Beginning accounts receivables + Ending accounts receivables) / 2
Average accounts receivables for WalCo = ($1,715 + $2,662) / 2 = $2,188.50
Average accounts receivables for TarMart = ($5,666 + $6,194) / 2 = $5,930
Average accounts receivables for CostGet = ($529 + $565) / 2 = $547
Receivables Turnover ratio
Net Sales
÷
Average accounts receivables
=
Receivables Turnover ratio
WalMart
312427
÷
2,188.50
=
142.8
times
TarMart
57878
÷
5,930.00
=
9.8
times
CostGet
58963
÷
547.00
=
107.8
times
Average Collection Period
365
÷
Receivables Turnover ratio
=
Average collection period
WalMart
365
÷
142.8
=
2.6
days
TarMart
365
÷
9.8
=
37.4
days
CostGet
365
÷
107.8
=
3.4
days
2.
The most efficient company in collecting cash from sales is WalCo
Receivables Turnover ratio
Net Sales
÷
Average accounts receivables
=
Receivables Turnover ratio
WalMart
312427
÷
2,188.50
=
142.8
times
TarMart
57878
÷
5,930.00
=
9.8
times
CostGet
58963
÷
547.00
=
107.8
times
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