Industry Characteristics and Collection Performance
The following information was taken from recent annual reports of Goodyear Tire&Rubber, and PPL EnergyCo., a public utility:
| Goodyear | PPL |
Netsales | $19.6 billion | $ 5.1 billion |
Average accounts receivable | 3.1 billion | $376 million |
a. Compute for each company the accounts receivable turnover rate for the year.
b. Compute foreach company theaverage number ofdays required tocollect outstanding receivables (round answers to nearest whole day).
c. Explain why the figures computed for Goodyear in parts a and b are so different from those computed for PPL.
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