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 Accounts Receivable Allowance for Doubtful Accounts Accounts Receivable, Net of Allowance 2015 $4,356 1,098 15 1,083 Mathis 2014 2013 $3,831 $4,518 704 830 18 19 686 811 Hashey 2015 2014 2013 $2,502 $2,468 $2,622 922 1,002 574 24 26 25 898 976 549 Required: 1. Calculate the receivables turnover ratios and days to collect for Mathis and Hashey for 2015 and 2014. 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.) 2014 2015 Hashey Mathis Mathis Hashey Receivables Turnover Ratio Days to Collect

Answer 1

Answer:

Required: 1 2015 2014 Mathis Hashey Hashey Mathis Receivable Turn over Ratio 4.9 2.7 5.1 3.2 Days to collect 73.0 73.0 121.7 121.7 Required: 2a Mathis Required: 2b Mathis

Explanation:

Mathis Requirement A Accounts Recievable Turn over ratio Denominator Account Recievable ratio Year Numerator Net sales Average Account Recievable Account Recievable ratio 2015 4356 884.50 4.9 times / 2014 3831 748.50 5.1 times Average Account Receivable Beginning Receivable Ending Receivable 2Average Account Receivable Year 686 1083 884.50 2015 2= 686 748.50 2014 811 2= Requirement: B Days in sales Receivable Year Numerator Denominator Days in sales Receivable / Days in sales Receivable 73.0 days 73.0 days Account Recievable ratio 365 2015 365 5 / 2014 365 5

Hashey Requirement: A Accounts Recievable Turn over ratio Denominator Account Recievable ratio Year Numerator Net sales Average Account Recievable Account Recievable ratio 2015 2502 937.00 2.7 times 2014 2468 762.50 3.2 times Average Account Receivable Ending Receivable 898 976 Beginning Receivable 2Average Account Receivable Year 2015 976 2= 937.00 + 762.50 2014 549 2= Requirement: B Days in sales Receivable Days in sales Receivable Days in sales Receivable 121.7 days 121.7 days Year Numerator Denominator Account Recievable ratio 365 2015 365 3 2014 365 3