Compute Cash Conversion Cycle for Competing Firms

Halliburton and Schlumberger compete in the oil field services sector. Refer to the following 2018 financial data for the two companies to answer the requirements.

$ millions	HAL	SLB
Total revenue	$24,610	$33,430
Cost of sales and services	21,624	29,093
Average accounts receivable	5,750	8,598
Average inventory	3,327	4,643
Average accounts payable	3,401	10,745

a. Compute the following measures for both companies.

1. AR Turnover and days sales outstanding (DSO)

Note: 1. Select the appropriate numerator and denominator used to compute AR turnover from the drop-down menu options. 2. Enter the numerator and denominator amounts to compute AR turnover.

	Company	Numerator	Denominator	AR turnover
		AnswerTotal RevenueCost of sales and servicesAverage accounts receivableAverage inventoryAverage accounts payableAR turnoverInventory turnoverAP turnover	AnswerTotal RevenueCost of sales and servicesAverage accounts receivableAverage inventoryAverage accounts payableAR turnoverInventory turnoverAP turnover
	HAL	Answer	Answer
	SLB	Answer	Answer

Note: 1. Select the appropriate numerator and denominator used to compute DSO from the drop-down menu options. 2. Enter the numerator and denominator amounts to compute DSO.

	Company	Numerator	Denominator	DSO
		AnswerNumber of days in a quarterNumber of days in six monthsNumber of days in a year	AnswerTotal RevenueCost of sales and servicesAverage accounts receivableAverage inventoryAverage accounts payableAR turnoverInventory turnoverAP turnover
	HAL	Answer	Answer
	SLB	Answer	Answer

2. Inventory Turnover and days inventory outstanding (DIO)

Note: 1. Select the appropriate numerator and denominator used to compute inventory turnover from the drop-down menu options. 2. Enter the numerator and denominator amounts to compute inventory turnover

	Company	Numerator	Denominator	Inventory turnover
		AnswerTotal RevenueCost of sales and servicesAverage accounts receivableAverage inventoryAverage accounts payableAR turnoverInventory turnoverAP turnover	AnswerTotal RevenueCost of sales and servicesAverage accounts receivableAverage inventoryAverage accounts payableAR turnoverInventory turnoverAP turnover
	HAL	Answer	Answer
	SLB	Answer	Answer

Note: 1. Select the appropriate numerator and denominator used to compute DIO from the drop-down menu options. 2. Enter the numerator and denominator amounts to compute DIO.

	Company	Numerator	Denominator	DIO
		AnswerNumber of days in a quarterNumber of days in six monthsNumber of days in a year	AnswerTotal RevenueCost of sales and servicesAverage accounts receivableAverage inventoryAverage accounts payableAR turnoverInventory turnoverAP turnover
	HAL	Answer	Answer
	SLB	Answer	Answer

3. AP Turnover and days payable outstanding (DPO)

Note: 1. Select the appropriate numerator and denominator used to compute AP turnover from the drop-down menu options. 2. Enter the numerator and denominator amounts to compute AP turnover.

	Company	Numerator	Denominator	AP turnover
		AnswerTotal RevenueCost of sales and servicesAverage accounts receivableAverage inventoryAverage accounts payableAR turnoverInventory turnoverAP turnover	AnswerTotal RevenueCost of sales and servicesAverage accounts receivableAverage inventoryAverage accounts payableAR turnoverInventory turnoverAP turnover
	HAL	Answer	Answer
	SLB	Answer	Answer

Note: 1. Select the appropriate numerator and denominator used to compute DPO from the drop-down menu options. 2. Enter the numerator and denominator amounts to compute DPO.

	Company	Numerator	Denominator	DPO
		AnswerNumber of days in a quarterNumber of days in six monthsNumber of days in a year	AnswerTotal RevenueCost of sales and servicesAverage accounts receivableAverage inventoryAverage accounts payableAR turnoverInventory turnoverAP turnover
	HAL	Answer	Answer
	SLB	Answer	Answer

4. Cash conversion cycle (CCC)

					Cash
					Conversion
	Company	DSO	DIO	DPO	Cycle
	HAL
	SLB

Question	Company
b. Which company better manages its accounts receivable?	AnswerHALSLB
c. Which company uses inventory more efficiently?	AnswerHALSLB
d. Which company better manages its accounts payable?	AnswerHALSLB

Please answer all parts of the question.