Mathis and Hashey are two of the largest and most successful toymakers in the wo
ID: 2555642 • Letter: M
Question
Mathis and Hashey are two of the largest and most successful toymakers in the world, in terms of the products they sell and their receivables management practices. To evaluate their ability to collect on credit sales, consider the following information reported in their annual reports (amounts in millions) Mathis 2011 Hashe 2011 $4,202$4,268 $4,222 2012 2012 2010 Fiscal Year Ended Net Sales 2010 $6,056 $5,631 $6,118 1,178 23 654 Accounts Receivable Allowance for Doubtful Accounts 784 26 910 27 1,002 32 1,082 34 Accounts Receivable. Net of Allowance 1,155 758 883 970 1,048 621 Required 1. Calculate the receivables turnover ratios and days to collect for Mathis and Hashey for 2012 and 2011 TIP: In your calculations, use average Accounts Receivable, Net of Allowance. (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.) 2012 2011 Mathis Hashey Mathis Hashey Receivables Turnover Ratio Days to Collect 2-a. Which of the companies was quicker to convert its receivables into cash in 2012? Mathis O Hashey 2-b. Which of the companies was quicker to convert its receivables into cash in 2011? O Mathis O HasheyExplanation / Answer
Calculate receivable turnover :
2a) Mathis
2b) Mathis
2012 2012 2011 2011 Mathis Hashey Mathis Hashey Receivabel turnover ratio 6056/956.50 = 6.3 4202/1009 = 4.2 5631/820.50 = 6.9 4268/834.50 = 5.1 Days to collect 365/6.3 = 57.9 days 365/4.2 = 86.9 days 365/6.9 = 52.9 days 365/5.1 = 71.6 days