Question

Mathis and Hashey are two of the largest and most successful toymakers in the world, in terms of the products they sell and their receivables management practices. To evaluate their ability to collect on credit sales, consider the following information reported in their annual reports (amounts in millions). Fiscal Year Ended: Net Sales 2012 $4,656 Mathis 2011 $4,031 2010 $4,718 2012 $2,802 Hashey 2011 $2,668 2010 $2,822 1,012 Accounts Receivable Allowance for Doubtful Accounts 1,108 - 16 714 19 840 20 932 25 584 26 27 Accounts Receivable, Net of Allowance 1,092 695 820 907 985 558 Required: 1. Calculate the receivables turnover ratios and days to collect for Mathis and Hashey for 2012 and 2011. TIP: In your calculations, use average Accounts Receivable, Net of Allowance. (Use 365 days in a year. Do not round intermediate calculations on Accounts Receivable Turnover Ratio. Round your final answers to 1 decimal place. Use final rounded answers from Accounts Receivable Turnover Ratio for Days to Collect ratio calculation.) 2011 2012 Hashey Mathis Mathis Hashey Receivables Turnover Ratio Days to Collect

Answer 1

Answer: 2012 Mathis Hashey 5.2 2011 Mathis Hashey 5.3 3.5 3.0 Receivables Turnover Ratio Days to Collect (Days) 70.19 121.67 | 68.87 104.29 Explanation: Mathis: 2012 Receivable Turnover ratio = Net sales - Average net receivables Receivable Turnover ratio = $4,656 = ((1,092 +695)/2] Receivable Turnover ratio = $4,656 = 893.50 Receivable Turnover ratio = 5.2 Days to collect = 365 = Receivable Turnover ratio Days to collect = 365 -5.2 Days to collect = 70.19 Days 2011 Receivable Turnover ratio = Net sales - Average net receivables Receivable Turnover ratio = $4,031 = [(695 - 820)/2] Receivable Turnover ratio = $4,031 = 757.50 Receivable Turnover ratio = 5.3 Days to collect = 365 - Receivable Turnover ratio Days to collect = 365 -5.3 Days to collect = 68.87 Days

Hashey: 2012 Receivable Turnover ratio = Net sales - Average net receivables Receivable Turnover ratio = $2,802 = [(907 +985)/2] Receivable Turnover ratio = $2,802 - 946 Receivable Turnover ratio = 3.0 Days to collect = 365 = Receivable Turnover ratio Days to collect = 365 = 3 Days to collect = 121.67Days 2011 Receivable Turnover ratio = Net sales - Average net receivables Receivable Turnover ratio = $2,668 = [(985 + 558)/2] Receivable Turnover ratio = $2,668 = 771.50 Receivable Turnover ratio = 3.5 Days to collect = 365 = Receivable Turnover ratio Days to collect = 365 = 3.5 Days to collect = 104.29 Days