Cola Inc. and Soda Co. are two of the largest and most successful beverage companies in the world in terms of the products that

Question

3 years ago

7

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 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). Cola Inc. Soda Co. Fiscal Year Ended: 2015 2014 2013 2015 2014 2013 Net Sales $ 32,219 $ 27,690 $ 28,944 $ 54,838 $ 40,232 $ 40,251 Accounts Receivable 4,418 3,753 3,081 6,407 4,654 3,724 Allowance for Doubtful Accounts 42 49 45 138 84 64 Accounts Receivable, Net of Allowance 4,376 3,704 3,036 6,269 4,570 3,660 Required: Calculate the receivables turnover ratios and days to collect for Cola Inc. and Soda Co. for 2015 and 2014.

Business

1 answer:

77julia77 [94] · Answer 1 · 2022-06-30T19:00:47+03:00

Answer :

Part 1 .The receivables turnover ratios:

2015 2014

Cola Inc Soda Co Cola Inc Soda Co

Receivables Turnover 7.36times 8.75times 7.48times 8.80times

Part 2. The days to collect:

2015 2014

Cola Inc Soda Co Cola Inc Soda Co

Days to Collect 49.57days 41.73days 48.83days 41.46days

Explanation :

Receivables Turnover = Sales/Trade Receivables

2015 2014

Cola Inc Soda Co Cola Inc Soda Co

Receivables Turnover 32219/4376 54838/6269 27690/3704 40232/4570

7.36times 8.75times 7.48times 8.80times

Days to Collect = Accounts Receivables / (Sales/365)

2015 2014

Cola Inc Soda Co Cola Inc Soda Co

Days to Collect 4376/(88,27) 6269/(150,24) 3704/(75,86) 4570/(110,22)

49.57days 41.73days 48.83days 41.46days