Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Accounts Receivable Jumover The Cempbell Soup Company manufactures and markets food products throughout the world. The following sales and receivable data (in malions) were reported

image text in transcribed
image text in transcribed
Accounts Receivable Jumover The Cempbell Soup Company manufactures and markets food products throughout the world. The following sales and receivable data (in malions) were reported by. Campbell soup for two recent years: Assume that the accounts receivable were 5638 million at the beginning of Year 1 . American Eagle Outfitters, Inc, selis eiothing, accesseries, and personal care products for men and women through its retal stores, American Eagle reported the folowing data (in milions) for two recent years: Assume that the accounts receivable were $87 millon at the beginning of Year 1 Aceounts rechivahle turnnver ratiac Use the abeve information to analyme the accounts recelvable turnover ratios of American Eagle Cuthters and Campbell Soup. a. Compute the average accounts receivable turnover ratio for Campbeli Soup and American tagle Outhitters for Year 2 and Year 1 . Round interim calculations and final answers to two decimal places. Use the above information to analyze the accounts receivable turnover ratios of American Eagle Outhitters and Campbel Soup. a. Compute the average accounts receivable tumover ratio for Campbell Soup and American Eagle Outfitters for Year 2 and Year 1. Round interim calculations and final answers to two decimal places. b. Does Campbell Soup or American Eagle have the higher average accounts receivable turnover ratio? has the higher average accounts receivable tumover ratio. c. Explain why the average turnover ratios are different in (b). American Eagle Outfitters operates a specialty retail chain of stores that sells directly to individual consumers. Many of these consumers (retal customers) pay using MasterCard or VISA, which is recorded as cash sales. In contrast, Campbell Soup manufactures foods that are sold to food wholesalers, grocery store chains, and other foed distributors that eventually sell Campbell's products to individual consumers. Accordingly, because of the extended distribution chain, we would expect Campbell Soup to have accounts recelvable than American Eagle. In addibin, we would expect Campbells business customers to take a to pay their recelvables. Thus, we would expect Campbeir's average accounts receivable turnover ratio to be than American Eagle. fremliar Fona Hy Wos Average the accounts receivabie tumover for each company for both years. Which company has the higher average ratio

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Lean Auditing Driving Added Value And Efficiency In Internal Audit

Authors: James C. Paterson

1st Edition

1118896882, 978-1118896884

More Books

Students also viewed these Accounting questions