Presented here is selected financial information (in millions of dollars) from the 2017 financial statements of Canadian National Railway Company and Canadian Pacific Railway Limited:

Instructions

a. Calculate the receivables turnover and average collection period for both companies.

b. Comment on the difference in their collection experiences.

If CN Railway or CP Railway sells its accounts receivable to speed up cash flows, what impact would you expect that to have on its ratios? Would a comparison between the two companies still be appropriate?

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CN Railway $13,041 28 16 875 CP Railway Sales Allowance for doubtful accounts, beginning of year Allowance for doubtful accounts, end of year Accounts receivable balance (net), beginning of year Accounts receivable balance (net), end of year $6,554 32 25 591 687 984