The table below contains selected financial information included in the 2016 financial statements of Tyson Foods Incorporated and Pilgrim's Pride Corporation. Balance sheets: Accounts receivable, net Income statements: Net sales Receivables turnover ratio Average collection period Tyson Tyson 2019 $ 2,173 $ 42,405 times days 2018 $ 1,723 $ 40,052 Required: 1. Calculate the 2019 receivables turnover ratio and average collection period for both companies. Evaluate the management of each company's investment in receivables. Note: Do not round intermediate calculations and round final answers to 2 decimal places. Consider 365 days in a year. Pilgrim's Pride 2019 2018 $ 741 $ 11,409 Pilgrim's Pride times days $ 562 $ 10,938
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At the end of the accounting period, a financial statement is prepared by every company, then at that time while preparing the financial statement, the company determines among its total receivable amount how much portion of receivables is collected by the company during that accounting period.
Accounts Receivable
The word “account receivable” means the payment is yet to be made for the work that is already done. Generally, each and every business sells its goods and services either in cash or in credit. So, when the goods are sold on credit account receivable arise which means the company is going to get the payment from its customer to whom the goods are sold on credit. Usually, the credit period may be for a very short period of time and in some rare cases it takes a year.
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