Homework Help is Here – Start Your Trial Now!
Business
Accounting
Compute and compare the accounts receivable turnover ratios, and the average collection period in days for PepsiCo and Amazon. Indicate all numbers you used to calculate the ratio. PepsiCo $86,392M Rev 2022 $8,920M AR & 2021 $8,680M AR AVERAGE AR = ($8,920+$8,680)/2) = $8,800M Turnover Ratio = $86,392/(($8,920+$8,680)/2) = 9.8 times Average Collection Period = 365(1 year)/9.8 = 37 days Amazon $513,983M Rev 2022 $42.360M AR & 2021 $32,891MAR AVERAGE AR = ($42,360+$32,891)/2) = $37625M Turnover Ratio = $513,983/(($42,360+$32,891)/2)) = 13.7 times Average Collection Period = 365(1 year)/13.7 = 26.6 days We can see scenarios where these companies may want to sell their receivables. In doing so, it helps to fend off accruing more debt. This in turn can help to increase their overall funding. A, "reasonable," average collection period in days is around 50 to 60 days. A reasonable accounts receivable turnover ratio is essentially based on the goods that a company is pushing out. Both companies that were required in this discussion saw their ratios drop during the year provided (2022). These ratios are not created equally. As stated prior, the ratio is going to be based on the products. Amazon has a much wider variety of items and goods that they sell compared to Pepsi. Therefore, Pepsi has a smaller turnover ratio. This is natural given the selection of goods.

Compute and compare the accounts receivable turnover ratios, and the average collection period in days for PepsiCo and Amazon. Indicate all numbers you used to calculate the ratio. PepsiCo $86,392M Rev 2022 $8,920M AR & 2021 $8,680M AR AVERAGE AR = ($8,920+$8,680)/2) = $8,800M Turnover Ratio = $86,392/(($8,920+$8,680)/2) = 9.8 times Average Collection Period = 365(1 year)/9.8 = 37 days Amazon $513,983M Rev 2022 $42.360M AR & 2021 $32,891MAR AVERAGE AR = ($42,360+$32,891)/2) = $37625M Turnover Ratio = $513,983/(($42,360+$32,891)/2)) = 13.7 times Average Collection Period = 365(1 year)/13.7 = 26.6 days We can see scenarios where these companies may want to sell their receivables. In doing so, it helps to fend off accruing more debt. This in turn can help to increase their overall funding. A, "reasonable," average collection period in days is around 50 to 60 days. A reasonable accounts receivable turnover ratio is essentially based on the goods that a company is pushing out. Both companies that were required in this discussion saw their ratios drop during the year provided (2022). These ratios are not created equally. As stated prior, the ratio is going to be based on the products. Amazon has a much wider variety of items and goods that they sell compared to Pepsi. Therefore, Pepsi has a smaller turnover ratio. This is natural given the selection of goods.

Managerial Accounting: The Cornerstone of Business Decision-Making
Managerial Accounting: The Cornerstone of Business Decision-Making
7th Edition
ISBN:9781337115773
Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Chapter15: Financial Statement Analysis
Section: Chapter Questions
Problem 14BEA: Last year, Nikkola Company had net sales of 2.299.500,000 and cost of goods sold of 1,755,000,000....
See similar textbooks
icon
Related questions
Question

Compare the accounts receivable turnover ratios, and the average collection period in days for PepsiCo and Amazon. Discuss the data given and explain

Compute and compare the accounts receivable turnover ratios, and the average collection period in days for PepsiCo and Amazon. Indicate all numbers you used to calculate the ratio. PepsiCo $86,392M Rev 2022 $8,920M AR & 2021 $8,680M AR AVERAGE AR = ($8,920+$8,680)/2) = $8,800M Turnover Ratio = $86,392/(($8,920+$8,680)/2) = 9.8 times Average Collection Period = 365(1 year)/9.8 = 37 days Amazon $513,983M Rev 2022 $42.360M AR & 2021 $32,891MAR AVERAGE AR = ($42,360+$32,891)/2) = $37625M Turnover Ratio = $513,983/(($42,360+$32,891)/2)) = 13.7 times Average Collection Period = 365(1 year)/13.7 = 26.6 days We can see scenarios where these companies may want to sell their receivables. In doing so, it helps to fend off accruing more debt. This in turn can help to increase their overall funding. A, "reasonable," average collection period in days is around 50 to 60 days. A reasonable accounts receivable turnover ratio is essentially based on the goods that a company is pushing out. Both companies that were required in this discussion saw their ratios drop during the year provided (2022). These ratios are not created equally. As stated prior, the ratio is going to be based on the products. Amazon has a much wider variety of items and goods that they sell compared to Pepsi. Therefore, Pepsi has a smaller turnover ratio. This is natural given the selection of goods.
Transcribed Image Text:Compute and compare the accounts receivable turnover ratios, and the average collection period in days for PepsiCo and Amazon. Indicate all numbers you used to calculate the ratio. PepsiCo $86,392M Rev 2022 $8,920M AR & 2021 $8,680M AR AVERAGE AR = ($8,920+$8,680)/2) = $8,800M Turnover Ratio = $86,392/(($8,920+$8,680)/2) = 9.8 times Average Collection Period = 365(1 year)/9.8 = 37 days Amazon $513,983M Rev 2022 $42.360M AR & 2021 $32,891MAR AVERAGE AR = ($42,360+$32,891)/2) = $37625M Turnover Ratio = $513,983/(($42,360+$32,891)/2)) = 13.7 times Average Collection Period = 365(1 year)/13.7 = 26.6 days We can see scenarios where these companies may want to sell their receivables. In doing so, it helps to fend off accruing more debt. This in turn can help to increase their overall funding. A, "reasonable," average collection period in days is around 50 to 60 days. A reasonable accounts receivable turnover ratio is essentially based on the goods that a company is pushing out. Both companies that were required in this discussion saw their ratios drop during the year provided (2022). These ratios are not created equally. As stated prior, the ratio is going to be based on the products. Amazon has a much wider variety of items and goods that they sell compared to Pepsi. Therefore, Pepsi has a smaller turnover ratio. This is natural given the selection of goods.
Expert Solution
steps

Step by step

Solved in 2 steps

SEE SOLUTIONCheck out a sample Q&A here
Blurred answer
Similar questions
  • SEE MORE QUESTIONS
Recommended textbooks for you
Managerial Accounting: The Cornerstone of Busines…
Managerial Accounting: The Cornerstone of Busines…
Accounting
ISBN:
9781337115773
Author:
Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:
Cengage Learning
Principles of Accounting Volume 1
Principles of Accounting Volume 1
Accounting
ISBN:
9781947172685
Author:
OpenStax
Publisher:
OpenStax College
Cornerstones of Financial Accounting
Cornerstones of Financial Accounting
Accounting
ISBN:
9781337690881
Author:
Jay Rich, Jeff Jones
Publisher:
Cengage Learning
SEE MORE TEXTBOOKS