The financial statements of Green Mountain Coffee are presented in Appendix B, following the financial statements for Starbucks in Appendix A.

\section*{Instructions}

(a) Based on the information contained in these financial statements, compute the following fiscal-year 1996 values for each company:

(1) Receivables turnover ratio. (Assume all sales were credit sales.)

(2) Average collection period for receivables.

(b) What conclusions concerning the management of accounts receivable can be drawn from these data?

(c) Green Mountain Coffee and Starbucks are competitors, but they have quite different approaches to selling. Green Mountain Coffee sells \(75 \%\) of its coffee wholesale, 15\% retail, and \(10 \%\) direct mail. Starbucks sells \(86 \%\) of its coffee retail, \(11 \%\) wholesale, and 3\% direct mail. What are the implications of these different sales practices for the importance of accounts receivable management to each company? What differences between the types of sales of the two companies makes direct comparison of these ratios difficult? How might your answers in parts

(a) and

(b) be changed by this information concerning each company's sales practices?