edugen wileyplus.com/edu Kimmel, Financial Accounting, 8e, Custom for University

Question

edugen wileyplus.com/edu Kimmel, Financial Accounting, 8e, Custom for University of Akron Hele I System Expand Your Critical Thinking 8-3 The financial statements of Amazon.com, Inc. are presented in Appendix D. Financial statements of Wal-Mart Stores, Inc. are presented in Appendix E pendix E al statements, compute the following values for each company for the most recent fiscal year. (Round answers to 1 decimal place, e.g. 15.2.) e turnover. (For Amazon.com, use "Net product sales." Assume all sales were credit sales.) (2) Average collection period for accounts receivable. times Average collection period days days

Explanation / Answer

Account receivables turnover ratio = Net credit sales (Net Revenue) / Average Account Receivables

Average Account Receivables = (Beginning receivables + Closing Receivables) / 2

For 2017, Account Receivables turnover of

Amazon = 177,866,000 / (8,339,000+13,164,000)/2 = 16.5 times

Wal-Mart = 485,873,000 / (5,624,000+5,835,000)/2 = 84.8 times

Average Collection period = 365 / Account Receivable Turnover

For 2017, Average collection period of

Amazon = 365 / 16.5 = 22.1 days

Wal-mart = 365 / 84.8 = 4.3 days

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