Question

a. What is each​ company's accounts receivable​ days? b. What is each​ company's inventory​ turnover? c. Which company is managing its accounts receivable and inventory more​ efficiently? a. What is each​ company's accounts receivable​ days? The accounts receivable days for​ Wal-Mart are nothing days. ​ (Round to two decimal​ places.) The accounts receivable days for Target are nothing days. ​ (Round to two decimal​ places.) b. What is each​ company's inventory​ turnover? Inventory turnover for​ Wal-Mart is nothing times. ​(Round to two decimal​ places.) Inventory turnover for Target is nothing times. ​(Round to two decimal​ places.) c. Which company is managing its accounts receivable and inventory more​ efficiently? ​(Select the best answers from the​ drop-down menus.) ▼ Wal-Mart Target is the company managing its accounts receivable more efficiently. ▼ Target Wal-Mart is the company managing its inventory more efficiently.

Answer 1

Answer:

a. Accounts receivable days = (Accounts Receivables/ Sales) * 365

Walmart Accounts Receivable Days = 5,587/482,546 * 365

= 4.23 days

Target Accounts Receivable Days = 832/73,481 * 365

= 4.13 days

b. Inventory Turnover = Cost of Goods Sold/ Inventory

Walmart Inventory Turnover = 360,628/45,362

= 7.95

Target Inventory Turnover = 52,560/8,549

= 6.15

c. With Accounts Receivable, the company with the lower Receivable Days is managing Accounts Receivables well because they are getting paid earlier.

Target has a lower Accounts Receivable Days so Target is the company managing its accounts receivable more efficiently.

A higher Inventory Turnover ratio means that a company is managing inventory better as they are selling and replacing inventory faster.

Walmart has a higher Inventory Turnover ratio so Wal-Mart is the company managing its inventory more efficiently.