The following information was summarized from the 2010 annual report of The Coca-Cola
Company:
(In millions)
Trade accounts receivable, less allowances of $48 and $55, respectively
December 31, 2010....................................................................$ 4,430
December 31, 2009......................................................................3,758
Net operating revenues for the year ended December 31: 2010.................35,119
2009......................................................................................30,990
The following information was summarized from the 2010 annual report of PepsiCo:
(In millions)
Accounts and notes receivable, net
December 25, 2010.....................................................................$ 6,323
December 26, 2009........................................................................4,624
Net revenue for the year ended:
December 25, 2010......................................................................57,838
December 26, 2009......................................................................43,232
Required
1. Calculate the accounts receivable turnover ratios for The Coca-Cola Company and PepsiCo for 2010.
2. Calculate the average collection period, in days, for both companies for 2010. Comment on the reasonableness of the collection periods for these companies considering the nature of their business.
3. Which company appears to be performing better? What other information should you consider in determining how these companies are performing?