Question

Comparative figures for Apple and Google follow. Apple One Year Two Years Google One Year Two Years Prior Current Current Year $ 18, 336 110, 855 $ millions Accounts receivable, net Net sales Year $ 17,874 229, 234 Prior Prior Prior $11, 556 74, 989 $ 15, 754 215, 639 $ 16, 849 233, 715 $14, 137 90, 272 Required: 1. Compute the accounts receivable turnover for (a) Apple and (b) Google for each of the two most recent years using the data shown. 2. Compute how many days, on average, it takes to collect receivables for the two most recent years for (a) Apple and (b) Google. 3. Which company more quickly collects its accounts receivable in the current year? Complete this question by entering your answers in the tabs below.

Answer 1

The answer has been presented in the supporting sheet. For detailed answer refer to the supporting sheet. For detailed answer refer to the supporting sheet.

Answer e Part 1) 3 account receivable turnover ratio Apple Google 5 Current Year 13.63 6.83 (229234/((17874+15754)/2)) (110855/((18336+14137)/2)) 7 One Year Prior 13.23 7.03 (215639/((15754+16849)/2)) ((215639/((15754+16849)/2) 0 Formula 1 account receivable turnover ratio 2 = sales / average account reecivables *100 4 Part 2) 5 Caverage collection period Apple Google 7 Current Year 26.77 53.46 (365/13.63) (365/6.83) 9 One Year Prior 27.59 51.94 (365/13.23) (365/7.03) 1 Formula 2 average collection period = 365/ account receivable turnover ratio 4 Part 3) 5. The correct answer is Apple 7 As it average collection period is less than google in the the current year.