Compute Cash Conversion Cycle for Competing Firms Halliburton and Schlumberger compete in the oil field services sector. Refer to the following 2018 financial data for the two companies to answer the requirements. $ millions HAL SLB Total revenue $24,310 $33,130 Cost of sales and services 21,324 28,793 Average accounts receivable 5,450 8,298 Average inventory 3,027 4,343 Average accounts payable 3,101 10,445 a. Compute the following measures for both companies. 1. AR Turnover and days sales outstanding (DSO) Note: 1. Select the appropriate numerator and denominator used to compute AR turnover from the drop-down menu options. 2. Enter the numerator and denominator amounts to compute AR turnover. Company Numerator Denominator AR turnover Answer Answer HAL Answer Answer SLB Answer Answer Note: 1. Select the appropriate numerator and denominator used to compute DSO from the drop-down menu options. 2. Enter the numerator and denominator amounts to compute DSO. Company Numerator Denominator DSO Answer Answer HAL Answer Answer SLB Answer Answer 2. Inventory Turnover and days inventory outstanding (DIO) Note: 1. Select the appropriate numerator and denominator used to compute inventory turnover from the drop-down menu options. 2. Enter the numerator and denominator amounts to compute inventory turnover Company Numerator Denominator Inventory turnover Answer Answer HAL Answer Answer SLB Answer Answer Note: 1. Select the appropriate numerator and denominator used to compute DIO from the drop-down menu options. 2. Enter the numerator and denominator amounts to compute DIO. Company Numerator Denominator DIO Answer Answer HAL Answer Answer SLB Answer Answer 3. AP Turnover and days payable outstanding (DPO) Note: 1. Select the appropriate numerator and denominator used to compute AP turnover from the drop-down menu options. 2. Enter the numerator and denominator amounts to compute AP turnover. Company Numerator Denominator AP turnover Answer Answer HAL Answer Answer SLB Answer Answer Note: 1. Select the appropriate numerator and denominator used to compute DPO from the drop-down menu options. 2. Enter the numerator and denominator amounts to compute DPO. Company Numerator Denominator DPO Answer Answer HAL Answer Answer SLB Answer Answer 4. Cash conversion cycle (CCC) Cash Conversion Company DSO DIO DPO Cycle HAL SLB Question Company b. Which company better manages its accounts receivable? Answer c. Which company uses inventory more efficiently? Answer d. Which company better manages its accounts payable? Answer
Compute Cash Conversion Cycle for Competing Firms
Halliburton and Schlumberger compete in the oil field services sector. Refer to the following 2018 financial data for the two companies to answer the requirements.
$ millions | HAL | SLB |
---|---|---|
Total revenue | $24,310 | $33,130 |
Cost of sales and services | 21,324 | 28,793 |
Average |
5,450 | 8,298 |
Average inventory | 3,027 | 4,343 |
Average accounts payable | 3,101 | 10,445 |
a. Compute the following measures for both companies.
1. AR Turnover and days sales outstanding (DSO)
Note: 1. Select the appropriate numerator and denominator used to compute AR turnover from the drop-down menu options. 2. Enter the numerator and denominator amounts to compute AR turnover.
Company | Numerator | Denominator | AR turnover | |
---|---|---|---|---|
Answer | Answer | |||
HAL | Answer | Answer | ||
SLB | Answer | Answer |
Note: 1. Select the appropriate numerator and denominator used to compute DSO from the drop-down menu options. 2. Enter the numerator and denominator amounts to compute DSO.
Company | Numerator | Denominator | DSO | |
---|---|---|---|---|
Answer | Answer | |||
HAL | Answer | Answer | ||
SLB | Answer | Answer |
2. Inventory Turnover and days inventory outstanding (DIO)
Note: 1. Select the appropriate numerator and denominator used to compute inventory turnover from the drop-down menu options. 2. Enter the numerator and denominator amounts to compute inventory turnover
Company | Numerator | Denominator | Inventory turnover | |
---|---|---|---|---|
Answer | Answer | |||
HAL | Answer | Answer | ||
SLB | Answer | Answer |
Note: 1. Select the appropriate numerator and denominator used to compute DIO from the drop-down menu options. 2. Enter the numerator and denominator amounts to compute DIO.
Company | Numerator | Denominator | DIO | |
---|---|---|---|---|
Answer | Answer | |||
HAL | Answer | Answer | ||
SLB | Answer | Answer |
3. AP Turnover and days payable outstanding (DPO)
Note: 1. Select the appropriate numerator and denominator used to compute AP turnover from the drop-down menu options. 2. Enter the numerator and denominator amounts to compute AP turnover.
Company | Numerator | Denominator | AP turnover | |
---|---|---|---|---|
Answer | Answer | |||
HAL | Answer | Answer | ||
SLB | Answer | Answer |
Note: 1. Select the appropriate numerator and denominator used to compute DPO from the drop-down menu options. 2. Enter the numerator and denominator amounts to compute DPO.
Company | Numerator | Denominator | DPO | |
---|---|---|---|---|
Answer | Answer | |||
HAL | Answer | Answer | ||
SLB | Answer | Answer |
4. Cash conversion cycle (CCC)
Cash | |||||
---|---|---|---|---|---|
Conversion | |||||
Company | DSO | DIO | DPO | Cycle | |
HAL | |||||
SLB |
Question | Company |
---|---|
b. Which company better |
Answer |
c. Which company uses inventory more efficiently? | Answer |
d. Which company better manages its accounts payable? | Answer |
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