The financial statements of Hershey Foods are presented in Appendix B, following the financial statements for Tootsie Roll in Appendix A.

Instructions

(a) Based on the information contained in these financial statements, compute the following 1998 values for each company:

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

(2) Average collection period for receivables.

(3) Credit risk ratio. (Hint: Hershey's note 14 provides allowances and giscoun combined.)

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

RESEARCH CASE