The following information was summarized from the 2006 annual report of the Coca-Cola Company:
(in millions)
Trade accounts receivable, less allowances of $63 and $72, respectively
December 31, 2006 $2,587
December 31, 2005 $2,281
Net operating revenues for the year ended December 31:
2006 $24,088
2005 $23,104
The following information was summarized from the fiscal year 2006 annual report of PepsiCo:
(in millions)
Accounts and notes, receivable, net
December 30, 2006 $3,725
December 31, 2005 $3,261
Net revenue for the year ended:
December 30, 2006 $35,137
December 31, 2005 $32,562
Complete the work:
Q1. Calculate the accounts receivable turnover ratios for Coca-Cola and PepsiCo for 2008.
Q2. Calculate the average collective period, in days, for both companies for 2006. Comment on the reasonableness of the collection periods for these companies considering the nature of their business.
Q3. Which company appears to be performing better? What other information should you consider in determining how these companies are performing?