Question
Hall Corporation and Harris Bears are two of the largest and most successful toymakers in the world, in terms of the products they sell and
Hall Corporation and Harris Bears are two of the largest and most successful toymakers in the world, in terms of the products they sell and their receivables management practices. To evaluate their ability to collect on credit sales, consider the following information reported in their annual reports (amounts in millions).
Fiscal Year Ended: | Hall | Harris | ||||
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2018 | 2017 | 2016 | 2018 | 2017 | 2016 | |
Net Sales | $ 5,056 | $ 4,531 | $ 5,118 | $ 3,202 | $ 3,068 | $ 3,222 |
Accounts Receivable | 1,128 | 734 | 860 | 952 | 1,032 | 604 |
Allowance for Doubtful Accounts | 18 | 21 | 22 | 27 | 29 | 28 |
Accounts Receivable, Net of Allowance | 1,110 | 713 | 838 | 925 | 1,003 | 576 |
Required:
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1. Calculate the receivables turnover ratios and days to collect for Hall and Harris for 2018 and 2017. TIP: In your calculations, use average Accounts Receivable, Net of Allowance.
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2-a. Which of the companies was quicker to convert its receivables into cash in 2018?
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2-b. Which of the companies was quicker to convert its receivables into cash in 2017?
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