Boise, Inc., manufactures packaging and paper products, including corrugated containers, protective packaging, and newsprint. KapStone Paper and
Question:
Boise, Inc., manufactures packaging and paper products, including corrugated containers, protective packaging, and newsprint. KapStone Paper and Packaging Corporation manufactures unbleached kraft paper products and corrugated products. Financial statement data for these two companies follow:
Required:
1. Determine the receivables turnover ratios for both companies for 2009, 2010, and 2011.
2. Which company collected its accounts receivable more quickly in 2011?
3. Which company showed more improvement in accounts receivable collection over the period presented?
4. What factors might explain why these two companies, which operate in similar markets, have different accounts receivable turnover ratios?
5. How does the way we compute average accounts receivable—by averaging the beginning and ending balances—potentially distort the accounts receivable turnover ratio? How could this potential distortion be mitigated?
Cornerstones of Cost Management
ISBN: 978-1111824402
2nd edition
Authors: Don R. Hansen, Maryanne M. Mowen