Question

Year 2 Year 1 Sales $11,649,079 $10,706,588 993,510 1,265,032 Assume that the accounts receivable (in thousands) were $1,045,338 at the beginning of Year 1. The Limited Brands Inc. sells women's clothing and personal health care products through specialty retail stores including Victorias Secret and Bath & Body Works stores. The Limited Brands reported the following (in millions) for two recent years: Year 2 Year 1 $9,613 267 Sales Accounts receivable Assume that the accounts receivable (in millions) were $249 at the beginning of Year 1. Use the above information to analyze the accounts recelvable turnover ratios of H.J. Heinz Compaly and The Limited Brands Inc. a. Compute the average accounts receivable turnover ratio for The Limited Brands Inc. and H.J. Heinz Company for Year 2 and Year $10,364 269 1. Round interim calculations and final answers to one decimal place. The Limited Brands Inc. : ( 30.67 H.J. Heinz Company: 1 x 10.32 x b. Does The Limited Brands or H.J. Heinz Company have the higher average accounts receivable turnover ratio? The Limited Brands Previous Next

Answer 1

		H J Henz Comopany
			Year2	Year1
	A	Sales	$11,649,079	$10,706,588
	B	Accounts receivable at the End	$993,510	$1,265,032
	C	Accounts receivable at the Beginning	$1,265,032	$1,045,338
	D=(B+C)/2	Average Accounts Receivable	$1,129,271	$1,155,185
	E=A/D	Receivable Turnover	10.31557438	9.268288629
		Average Accounts Receivable Turnover of HJ Henz Company	9.79	(10.32+9.27)/2
		Limited Brands Inc
			Year2	Year1
	A	Sales	$10,364	$9,613
	B	Accounts receivable at the End	$269	$267
	C	Accounts receivable at the Beginning	$267	$249
	D=(B+C)/2	Average Accounts Receivable	$268	$258
	E=A/D	Receivable Turnover	38.67164179	37.25968992
		Average Accounts Receivable Turnover of HJ Henz Company	37.97	(38.67+37.26)/2
	b	H J Nenz Company has higher accounts receivable turnover ratio