Question
Cola Inc. and Soda Co. are two of the largest and most successful beverage companies in the world in terms of the products that they
Cola Inc. and Soda Co. are two of the largest and most successful beverage companies in the world in terms of the products that they sell and their receivables management practices. To evaluate their ability to collect on credit sales, consider the following rounded amounts reported in their annual reports (amounts in millions).
Cola Inc. | Soda Co. | ||||||||||||||||||
Fiscal Year Ended: | 2015 | 2014 | 2013 | 2015 | 2014 | 2013 | |||||||||||||
Net Sales | $ | 32,719 | $ | 28,190 | $ | 29,444 | $ | 55,338 | $ | 40,732 | $ | 40,751 | |||||||
Accounts Receivable | 4,428 | 3,763 | 3,091 | 6,417 | 4,664 | 3,734 | |||||||||||||
Allowance for Doubtful Accounts | 43 | 50 | 46 | 139 | 85 | 65 | |||||||||||||
Accounts Receivable, Net of Allowance | 4,385 | 3,713 | 3,045 | 6,278 | 4,579 | 3,669 | |||||||||||||
Required:
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Calculate the receivables turnover ratios and days to collect for Cola Inc. and Soda Co. for 2015 and 2014. (Use 365 days in a year. Do not round intermediate calculations on Accounts Receivable Turnover Ratio. Round your final answers to 1 decimal place. Use final rounded answers from Accounts Receivable Turnover Ratio for Days to Collect ratio calculation.)
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Which of the companies is quicker to convert its receivables into cash?
multiple choice
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Cola Inc.
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Soda Co.
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