The asset side of the 2016 balance sheet for BURLINGTON NORTHERN SANTA FE, LLC (BNSF) is below. The company reported total revenues of $19,829 million in 2016 and $21,967 million in 2015.

BURLINGTON NORTHERN SANTA FE, LLC Consolidated Balance Sheets (excerpts)
in Millions		Dec. 31, 2016	Dec. 31, 2015
Current assets:
Cash and cash equivalents		$ 3,218	$ 2,329
Accounts receivable, net of allowances for doubtful accounts of $88 and $74 as of Dec. 31, 2016 and Dec.31, 2015, respectively		1,272	1,198
Materials and supplies		825	829
Current portion of deferred income taxes		0	245
Other current assets		235	337
Total current assets		5,550	4,938
Property and equipment, net of accumulated depreciation of $6,130 and $4,845, respectively		61,250	59,510
Goodwill		14,845	14,845
Intangible assets, net		430	468
Other assets		2,047	1,942
Total assets		$84,122	$81,703

What proportion of gross accounts receivable does BNSF record as an allowance each year? Interpret the year-over-year change in the ratio.

Calculate the common-size amount for net accounts receivable (as a percentage of total assets) for 2016 and 2015. Comment on the trend.

Compute the accounts receivable turnover and average collection period for 2016 and 2015 using net receivable amount. At December 31, 2014, accounts and other receivables (net) were $1,386 million. Comment on the trend. What additional information you need to make a meaningful comparison.

Leggett and Platt (another company) provided the following details relating to allowance for doubtful accounting in its annual financial statements. The company’s total revenues were $3,782 mil in 2014, $3,917 mil in 2015 and $3,750 mil in 2016.

($ in Million)

Fiscal Year	2014	2015	2016
Beginning balance	17.6	17.2	9.9
Provisions for uncollectible accounts	4.9	2.6	1.6
Write-off of uncollectible accounts, net of recoveries	-5.3	-9.9	-4.1
Ending balance	17.2	9.9	7.4

By looking at the numbers, comment on the change in the allowance account by covering the following points: what amount of bad debt expense did the company report each year? How does these expenses compare with the amount of accounts receivable actually written off?

5. The 2016 balance sheet of Leggett & Platt reports total assets of $2,984.1 million for 2016 and $2,963.7 million for 2015. The financial statements include the following footnote:

Accounts and other receivables at December 31 consisted of the following:

(in millions)	2016	2015
Trade	$458.0	$458.0
Other	35.8	71.5
Total accounts and other receivables	$493.8	$529.5
Allowance for doubtful accounts	(7.2)	(9.3)
Total accounts and other receivables, net	$486.6	$520.2

Required:

Determine gross accounts receivable as a percentage of total assets and the allowance account balance as a percentage of gross receivables over the two-year period. Comment on the year-over-year change in the ratio. What do you infer about the companies’ quality of receivables?