2019 2018 Net Sales $ 3,749.9 $ 3,917.2 Consolidated Balance Sheet 2019 2018 Cash and Cash equivalents $ &nbs

	2019	2018
Net Sales	$ 3,749.9	$ 3,917.2

Consolidated Balance Sheet
	2019	2018
Cash and Cash equivalents	$ 281.9	$ 253.2
Trade receivables, net of allowance $7.2 and $9.3,	$ 450.8	$ 448.7
at 12/31/19 & 12/31/18 respectively
Other receivables, net	$ 35.8	$ 71.5
Total receivables, net	$ 486.6	$ 520.2
Inventories
Finished goods	$ 255.7	$ 242.8
Work in progress	$ 52.6	$ 42.6
Raw materials & supplies	$ 245.1	$ 241.8
LIFO reserve	$ (33.8)	$ (22.6)
Total inventories, net	$ 519.6	$ 504.6
Prepaid expenses and other current assets	$ 36.8	$ 33.2
Total current assets	$ 1,324.9	$ 1,311.2
Property, plant and equipment-at cost
machinery and equipment	$ 1,133.8	$ 1,099.1
Buildings and other	$ 559.4	$ 548.2
Land	$ 37.7	$ 40.0
Total property, plant and equipment	$ 1,730.9	$ 1,687.3
Less accumulated depreciation	$ (1,165.4)	$ (1,146.5)
Net property, plant and equipment	$ 565.5	$ 540.8
Other assets
Goodwill	791.3	806.1
Other intangibles, less accumulated amortization	164.9	188.4
of $137.0 & $139.8 at 12/31/19 & 12/31/18 respectively
Sundry	137.5	117.2
Total other assets	1093.7	1111.7
Total assets	$ 2,984.1	$ 2,963.7

Be sure to show all work
Complete the following 4 questions.
A. Find the accounts receivable turnover for 2019 & 2018.
At 12/31/17, accounts and other receivables , net were $523.3
	2019	2018
Answer

B. Find the days sales outstanding (DSO) for each year.

Answer

C. Does the number of days to collect receivables seem
apporpriate for the company (company in consumer goods, sells
to retailers).

Answer:

D. How could the company improve its accounts
receivables turnover?

Answer:

Expert Solution

Part A Account receivable turnover ratio = Net credit sales/ Average Receivable

Year 2019 Year 2018

Average Receivable (B) (486.6+520.2)/100 = 503.4 (520.2 + 523.3)/2 = 521.7

Net credit sales (A) 3,749.9 3,917.2

Account receivable turnover ratio C=(A/B) 7.449 7.509

Part B Days Sales Outstanding = 365/ Account receivable turnover ratio

Year 2019 Year 2018

Days Sales outstanding (365/C) 49.00 48.61

Part C Since company belongs to consumer goods industries therefore for day to day operation and for payment to wholeseller producer it needs cash. Hence credit period of 49 days seems more. Company should try to reduce its collection time period.

Part D Following are the suggested ways to improve the ratio:-

(1) Give discounts to the customer for early payments

(2) Regular send the reminder for payments.

(3) Be proactive in the collection of payment.

(4) Encourage online payment rather than cheque payment.

ekkarill92 answered 2 years ago

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