Coca-Cola and PepsiCo are two of the largest and most successful beverage compan
ID: 2481163 • Letter: C
Question
Coca-Cola and PepsiCo are two of the largest and most successful beverage companies in the world in terms of the products that they sell and thee receivables management practices. To evaluate their ability to collect on credit sales, consider the following information reported m their 2010, 2009, and 2008 annual reports (amounts In millions). Calculate the receivables turnover ratios and days to collect for Coca-Cola and PepsiCo for 2010 and 2009. (Use 365 days in a year. Do not round intermediate calculations on Accounts Receivable Turnover Ratio. Round your final answers to 1 decimal place. Use final rounded answers from Accounts Receivable Turnover Ratio for Days to Collect ratio calculation.)Explanation / Answer
Answer:
2010
2009
Coca Cola
Pepsico
Coca Cola
Pepsico
Receivables Turnover ratio(See Working Note 1)
8.6
10.6
9.1
10.4
Days To Collect(See Working Note 2)
42.4
34.4
40.1
35.1
Working Note 1:
2010
2009
Coca Cola
Pepsico
Coca Cola
Pepsico
Net Sales
35119
57838
30990
43232
Average Accounts Receivable =
(Opening Accounts Receivable + Closing Accounts Receivable)/2
4094
5473.5
3424
4169
Receivables Turnover Ratio =
Net Sales/Average Accounts receivable
8.578163166
10.5669133
9.05081776
10.3698729
Rounded Off to One decimal Place
8.6
10.6
9.1
10.4
Working Note 2:
Receivables Turnover Ratio
8.6
10.6
9.1
10.4
Days to Collect =
365/Receivable Turnover Ratio
42.44186047
34.4339623
40.1098901
35.0961538
Days to Collect(Rounded Off to one decimal place)
42.4
34.4
40.1
35.1
2010
2009
Coca Cola
Pepsico
Coca Cola
Pepsico
Receivables Turnover ratio(See Working Note 1)
8.6
10.6
9.1
10.4
Days To Collect(See Working Note 2)
42.4
34.4
40.1
35.1