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Making Business Decisions: Analyzing The Coca-Cola Company's Accounts Receivable Turnover Ratio
You are considering making a loan to The Coca-Cola Company. The following information is from the financial statements included in Form 10-K for fiscal years 2011 and 2010 (in millions of dollars):
The following information is from the financial statements included in Form 10-K for fiscal years 2011 and 2010 for PepsiCo, Inc. (in millions of dollars):
The following information is from the financial statements included in Form 10-K for fiscal year 2011 for The Coca-Cola Company:
The accounts receivable turnover ratio is calculated by
by
.
Calculate the average accounts receivable for the Coca-Cola Company in 2011.
Enter amount in millions in dollars. Round your answer to one decimal place.
$ __________
Calculate Coca Cola's accounts receivable turnover ratio for the fiscal year 2011: (Note: Assume that all sales are credit sales. And, round your answer to one decimal place.)
________times
The Number of Days' Sales in Receivables indicates the __________
it takes to collect a receivable. The measure is computed by dividing 360 days by the _______
.
The Number of Days' Sales in Receivables is____days
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Making Business Decisions: Analyzing The Coca-Cola Company's Accounts Receivable Turnover Ratio
You are considering making a loan to The Coca-Cola Company. The following information is from the financial statements included in Form 10-K for fiscal years 2011 and 2010 (in millions of dollars):
The following information is from the financial statements included in Form 10-K for fiscal years 2011 and 2010 for PepsiCo, Inc. (in millions of dollars):
The following information is from the financial statements included in Form 10-K for fiscal year 2011 for The Coca-Cola Company:
2011 Income Statement 2011 Balance SheetThe accounts receivable turnover ratio is calculated by
Explanation / Answer
Answer:
Calculating Average accounts receivables:
Average accounts receivable = (Beginning A/R + Ending A/R)/2
Average accounts receivable = ($4430+$4920)/2 = $9350/2 = $4675
The average accounts receivable for the Coca-Cola Company in 2011 is $4675 million.
Calculating Accounts receivable turnover ratio:
Accounts receivable turnover ratio = Net credit sales (Net operating revenue) /Average accounts receivables
Accounts receivable turnover ratio = $46542/$4675 = 10 times
Coca Cola's accounts receivable turnover ratio for the fiscal year 2011 is 10 times.
Calculating Number of Days' Sales in Receivables:
Number of Days' Sales in Receivables = 360 days/Accounts receivable turnover ratio
Number of Days' Sales in Receivables = 360 / 10 = 36 days
The Number of Days' Sales in Receivables is 36 days.
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