Hasbro designs, manufactures, and markets toys and games for children and adults in the United States and in international markets. Hasbro’s portfolio of brands and products contains some of the most well-known toys and games under famous brands such as Playskool, Tonka Trucks, Milton Bradley, and Parker Brothers and includes such classic games as Scrabble®, Monopoly®, and Clue®. Assume that sales during 2022 totaled $4,448 million. Also assume that accounts receivable totaled $1,095 million at the beginning and $1,218 million at the end of 2022.

REQUIRED
a. Use the average balance to compute the accounts receivable turnover ratio for Hasbro for 2022.
b. Assume that Hasbro’s sales will grow at a 13.0% rate each year for Year +1 through Year +5 and that the accounts receivable turnover ratio each year will equal the ratio computed in Requirement a for 2022. Project the amount of accounts receivable at year-end through Year +5 based on the accounts receivable turnover computed in Requirement a. Also compute the percentage change in accounts receivable between each of the year-ends through Year +5.
c. Does the pattern of growth in your projections of Hasbro’s accounts receivable seem reasonable considering the assumptions of smooth growth in sales and steady turnover? Explain.
d. The changes in accounts receivable computed in Requirement b display the sawtooth pattern described on page 586. Smooth the changes in accounts receivable by computing the yearend accounts receivable balances for Year +1 through Year +5 using the compound annual growth rate in accounts receivable between the end of 2022 and the end of Year +1 from Requirement b.
e. Smooth the changes in accounts receivable using the compound annual growth rate in accounts receivable between the end of 2022 and the end of Year +4 from Requirement b. Apply this growth rate to compute accounts receivable at the end of Year +1 through Year +5. Why do the amounts for ending accounts receivable using the growth rate from Requirement d differ from those using the growth rate from this requirement?
f. Compute the accounts receivable turnover for 2022 by dividing sales by the balance in accounts receivable at the end of 2022 (instead of using average accounts receivable as in Requirement a). Use this accounts receivable turnover ratio to compute the projected balance in accounts receivable at the end of Year +1 through Year +5. Also compute the percentage change in accounts receivable between the year-ends for Year +1 through Year +5.