Question

I just need the last section on this one!

Analyzing Accounts Receivable
The following information is taken from the annual report of The Coca-Cola Company:

(amounts in millions)	2014	2015
Net sales	$45,998	$44,294
Accounts receivable (net)	4,466	3,941

Calculate the receivable turnover ratio and the receivable collection period for 2014 and 2015. Round your answer to two decimal places.

	2014		2015
Receivable turnover ratio	Answer		Answer
Receivable collection period	Answer	days	Answer	days

How much additional cash flow from operations could Coca-Cola generate in 2015 if it could reduce its receivable collection period to just 30 days?
Round your final answer to the nearest million dollar.

	2015
Additional cash flow	$Answer	million

Answer 1

Answer of Part 1:

For 2015:

Receivable Turnover = Net Sales / Accounts Receivable
Receivable Turnover = $44,294 / $3,941
Receivable Turnover = 11.24 times

Receivable Collection Period = 365 days / Receivable Turnover
Receivable Collection Period = 365 / 11.24
Receivable Collection Period = 32.47 days

For 2014:

Receivable Turnover = Net Sales / Accounts Receivable
Receivable Turnover = $45,998 / $4,466
Receivable Turnover = 10.30 times

Receivable Collection Period = 365 / Receivable Turnover
Receivable Collection Period = 365 / 10.3
Receivable Collection Period = 35.44 days

Answer of Part 3:

Revised Turnover Ratio = 365 days / Receivable collection period
Revised Turnover Ratio = 365/30
Revised Turnover Ratio = 12.17 times

Revised Receivable Balance = Net Sales / Revised Turnover Ratio
Revised Receivable Balance = $44,294 / 12.17
Revised Receivable Balance = $3,639.61

Additional Cash Flow = Accounts Receivable – Revised Accounts Receivable
Additional Cash Flow = $3,941 - $3,640
Additional Cash Flow = $301