Question

The following information was obtained from the 2018 and 2017 financial statements of Better Books and Tenacious Texts.

Better Books and Tenacious Texts. Assume all sales are on credit for both companies.

 

 

 

 

 

 

 

 

 

 

 

 

(in millions)

 

Better Books

Tenacious Texts

 

 

 

 

Accounts and notes receivable, net

12/31/18

$3,100

$4,800

 

 

 

 

 

12/31/2017

3,320

4,500

 

 

 

 

Inventories                                    

12/31/2018

2,080

2,530

 

 

 

 

 

12/31/2017

2,250

2,320

 

 

 

 

Net revenue                  

2018

32,010

44,050

 

 

 

 

 

2017

28,900

39,500

 

 

 

 

Cost of goods sold    

2018

11,370

20,350

 

 

 

 

 

2017

10,400

18,000

 

 

 

 

 

 

 

 

 

 

 

 

REQUIRED:

 

 

 

 

 

 

 

1. Using the information provided, compute the following for each company for 2018 (rounded to two decimal places):

 

 

 

 

a. Accounts receivable turnover ratio

 

 

 

 

 

 

b. Number of days’ sales in receivables

 

 

 

 

 

 

c. Inventory turnover ratio

 

 

 

 

 

 

 

d. Number of days’ sales in inventory

 

 

 

 

 

 

e. Cash-to-cash operating cycle

 

 

 

 

 

 

The following information was obtained from the 2018 and 2017 financial statements of Better Books and Tenacious Texts.

Better Books and Tenacious Texts. Assume all sales are on credit for both companies.

 

 

 

 

 

 

 

 

 

 

 

 

(in millions)

 

Better Books

Tenacious Texts

 

 

 

 

Accounts and notes receivable, net

12/31/18

$3,100

$4,800

 

 

 

 

 

12/31/2017

3,320

4,500

 

 

 

 

Inventories                                    

12/31/2018

2,080

2,530

 

 

 

 

 

12/31/2017

2,250

2,320

 

 

 

 

Net revenue                  

2018

32,010

44,050

 

 

 

 

 

2017

28,900

39,500

 

 

 

 

Cost of goods sold    

2018

11,370

20,350

 

 

 

 

 

2017

10,400

18,000

 

 

 

 

 

 

 

 

 

 

 

 

REQUIRED:

 

 

 

 

 

 

 

1. Using the information provided, compute the following for each company for 2018 (rounded to two decimal places):

 

 

 

 

a. Accounts receivable turnover ratio

 

 

 

 

 

 

b. Number of days’ sales in receivables

 

 

 

 

 

 

c. Inventory turnover ratio

 

 

 

 

 

 

 

d. Number of days’ sales in inventory

 

 

 

 

 

 

e. Cash-to-cash operating cycle

 

 

 

 

 

 

               

 

 

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