Costco Wholesale Corporation operates membership warehouses that sell a variety Costco Wholesale Corporation operates membership warehouses that sell a variety of branded and private label products. Headquartered in Issaquah, Washington, it also sells merchandise online in the United States (Costco.com) and in Canada (Costco.ca). For two recent years, Costco reported the following (in millions): _______________________ Year 2 Year 1 Sales ………………………………. $116,199 ………. $112,640 Accounts receivable at end of year … 1,972 …………….. 1,817 Assume that the accounts receivable (in thousands) were $1,822 at the beginning of Year 1. 1. Compute the accounts receivable turnover for Year 2 and Year 1. Round to two decimal places. 2. Compute the days’ sales in receivables at the end of Year 2 and Year 1. Use 365 days and round to one decimal place. 3. What conclusions can be drawn from (1) and (2) regarding Costco’s efficiency in collecting receivables? 4. Given the nature of Costco’s operations, do you believe Costco’s accounts receivable turnover ratio would be higher or lower than a typical manufacturing company such as the Campbell Soup Company? Explain. Costco Wholesale Corporation operates membership warehouses that sell a variety

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Description: Costco Wholesale Corporation operates membership warehouses that sell a variety Costco Wholesale Corporation operates membership warehouses that sell a variety of branded and private label products. Headquartered in Issaquah, Washington, it

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Costco Wholesale Corporation operates membership warehouses that sell a variety

Costco Wholesale Corporation operates membership warehouses that sell a variety of branded and private label products. Headquartered in Issaquah, Washington, it also sells merchandise online in the United States (Costco.com) and in Canada (Costco.ca). For two recent years, Costco reported the following (in millions):

_______________________________ Year 2 ________ Year 1

Sales ………………………………. $116,199 ………. $112,640

Accounts receivable at end of year … 1,972 …………….. 1,817

Assume that the accounts receivable (in thousands) were $1,822 at the beginning of Year 1.

1. Compute the accounts receivable turnover for Year 2 and Year 1. Round to two decimal places.

2. Compute the days’ sales in receivables at the end of Year 2 and Year 1. Use 365 days and round to one decimal place.

3. What conclusions can be drawn from (1) and (2) regarding Costco’s efficiency in collecting receivables?

4. Given the nature of Costco’s operations, do you believe Costco’s accounts receivable turnover ratio would be higher or lower than a typical manufacturing company such as the Campbell Soup Company? Explain.

Costco Wholesale Corporation operates membership warehouses that sell a variety

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