Super-Cola and Popinski are two of the largest and most successful beverage comp
ID: 2526367 • Letter: S
Question
Super-Cola and Popinski are two of the largest and most successful beverage companies in the world in terms of the products that they sell and their receivables 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 Super-Cola 2012 2011 2010 $ 30,819 $ 26,190 $ 27,444 2012 $ 52,948 Popinski 2011 $ 38,732 2010 $ 38,751 Accounts Receivable Allowance for Doubtful Accounts 4,388 39 3,723 46 3,051 42 6,377 135 4 ,624 81 3,694 61 Accounts Receivable, Net of Allowance 4,349 3,677 3,009 6,242 4 ,543 3,633 Required: 1. Calculate the receivables turnover ratios and days to collect for Super-Cola and Popinski for 2012 and 2011. (Use 365 days in a year. Do not round intermediate calculations on Accounts Receivable Turnover Ratio. Round your final answers to 1 decimal place. Use final rounded answers from Accounts Receivable Turnover Ratio for Days to Collect ratio calculation.) 2012 2011 Super-Cola Popinski Super-Cola Popinski Receivables Turnover Ratio Days to collect 2. Which of the companies is quicker to convert its receivables into cash in the year 2012? O Super-Cola O PopinskiExplanation / Answer
2012
2011
Super cola
Popinski
Super cola
Popinski
Receivables turnover ratio
7.7 Times
9.8 Times
7.7 Times
9.4 Times
Days to collect
47 Days
37 Days
47 Days
39 Days
Super cola
Receivables turnover ratio
2012 = $30819 / [($4349+$3677)/2] = 7.7 Times
2011 = $26190 / [($3677+$3009)/2] = 7.8 Times
Days to collect
2012 = 365 / 7.7 = 47 Days
2011 = 365 / 7.8 = 47 Days
Popinski
Receivables turnover ratio
2012 = $52948 / [($6242+$4543)/2] = 9.8 Times
2011 = $38372 / [($4543+$3633)/2] = 9.4 Times
Days to collect
2012 = 365 / 9.8 = 37 Days
2011 = 365 / 9.4 = 39 Days
2012
2011
Super cola
Popinski
Super cola
Popinski
Receivables turnover ratio
7.7 Times
9.8 Times
7.7 Times
9.4 Times
Days to collect
47 Days
37 Days
47 Days
39 Days
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