A firm has days' sales in inventory of 105 days, an average collection period of 35 days, and takes 42 days, on average, to pay its accounts payable. Taken together, what do these three figures imply about the firm's operations and its cash flows?
A firm has days' sales in inventory of 105 days, an average collection period of 35 days, and takes 42 days, on average, to pay its accounts payable. Taken together, what do these three figures imply about the firm's operations and its cash flows?
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I just need the last section on this one!
Analyzing Accounts Receivable
The following information is taken from the annual report of TheCoca-Cola Company:
| (amounts in millions) | 2014 | 2015 |
|---|---|---|
| Net sales | $45,998 | $44,294 |
| Accounts receivable (net) | 4,466 | 3,941 |
Calculate the receivable turnover ratio and the receivablecollection period for 2014 and 2015. Round your answer to twodecimal places.
| 2014 | 2015 | |||
|---|---|---|---|---|
| Receivable turnover ratio | Answer | Answer | ||
| Receivable collection period | Answer | days | Answer | days |
How much additional cash flow from operations could Coca-Colagenerate in 2015 if it could reduce its receivable collectionperiod to just 30 days?
Round your final answer to the nearest million dollar.
| 2015 | ||
|---|---|---|
| Additional cash flow | $Answer | million |
Accounts Receivable and Inventory Ratios
Bell Company, whose current assets at December 31 are shownbelow, had net sales for the year of $900,000 and cost of goodssold of $550,000. At the beginning of the year, Bellâs accountsreceivable (net) were $160,000 and its inventory was $195,000.
| Cash | $29,000 |
| Short-term investments | 49,400 |
| Accounts receivable (net) | 170,000 |
| Inventory | 200,000 |
| Prepaid expenses | 11,600 |
| Current assets | $460,000 |
Round the turnover calculations to two decimal points. Use 365 daysin a year and round days calculations to the nearest day (wholenumber).
a. What is the companyâs accounts receivable turnover for theyear?
b. What is the companyâs average collection period for theyear?
days
c. What is the companyâs inventory turnover for the year?
d. What is the companyâs daysâ sales in inventory for theyear?
days
