PepsiCo, Inc.’s financial statements are presented in Appendix A. Financial statements of PEPSICO The Coca-Cola Company are presented in Appendix B.

Instructions

(a) Based on the information in these financial statements, compute the following 2010 ratios for each company. (Assume all sales are credit sales and that PepsiCo’s receivables on its balance sheet are all trade receivables.)

(1) Accounts receivable turnover ratio.

(2) Average collection period for receivables.

(b) What conclusions about managing accounts receivable can you draw from these data?

Real-World Focus