Question
Royal Dutch Shell [RDS] sells certain of its accounts receivable through its wholly owned subsidiary, Royal Receivables Company, a special limited-purpose corporation. The company's net
Royal Dutch Shell [RDS] sells certain of its accounts receivable through its wholly owned subsidiary, Royal Receivables Company, a special limited-purpose corporation. The company's net accounts receivables sold under this facility totalled $306.2, $230.0, and $206.6 million at December 31,2021, 2020, and 2019, respectively. Selected reported financial data follow:
Years ended December 31 (in $millions)
|
|
| 2021 | 2020 | |
| 1 | Sales | 5902 | 3604 | |
| 2 | Accounts Receivables | 624 | 1084 | |
| 3 | Current Assets | 1372 | 4156 | |
| 4 | Current Liabilities | 738 | 3986 | |
| 5 | Total Debt | 2192 | 533 | |
| 6 | Stock Holders Equity | 1900 | 3036 | |
| 7 | Cash flow from operations | 116 | (192) |
a. Compute the impact of the sale of receivables on Royal Dutch Shell 2021:
- Current ratio
- Receivable turnover ratio
- Receivables collection days
b. Compute the reported and adjusted (for the sale of receivables) debt to equity ratio for 2021.
c. Discuss the impact of the sale of receivables on the trend in the firms cash flow 2020-2021
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started
Create Wealth How You Can Ditch The 9 5 Job With Multifamily Investing
Authors: Pam Scamardo
1st Edition
979-8986637709
