Chapter 9, Problem 1FSC

Financial Statement Analysis Case: Revlon

The following information is from the 2016 financial statements of Revlon, the beauty products company.

Balance Sheet Information (in million of dollars)*

At December 31	2016	2015	2014
Accounts Receivable	$ 423.9	$ 244.9	$ 238 9
Inventories	424.6	183.8	156.6
Accounts Payable	296.9	201.3	153.5

Income Statement Information

For the year	2016	2015	2014
Sales (all credit)	$2,334.0	$1,914.3	$1,941.0
Cost of Goods Sold	917.1	667.8	668 3

Required

Use Revlon’s financial information to answer the following questions:

a. What is Revlon’s operating cycle (in days) in 2016 and 2015? Comment on the change from year to year.

b. What is Revlon’s cash operating cycle (in days) in 2016 and 2015? Comment on the change from year to year

c. Use Revlon’s financial information to compare the components of Revlon’s operating cycle and cash operating cycle to L’Oréal’s for 2016. The following table provides the amounts for L’Oréal from worked Example 9.17 in the text.

Component	L’Oréal 2016	Revlon 2016
Accounts receivable turnover ratio	6.83	______
Days sales outstanding	53.44	______
Inventory turnover ratio	2.86	______
Days inventory on hand	127.62	______
Accounts payable turnover ratio	1.82	______
Days accounts payable outstanding	200.55	______
Operating cycle	181.06	______
Cash operating cycle	19.49	______