CP 8-6 Accounts receivable turnover
The accounts receivable turnover ratio will vary across companies, depending on the nature of the company’s operations. For example, an accounts receivable turnover of 6 for a retailer is unacceptable, but might be excellent for a manufacturer of specialty milling equipment. A list of well-known companies follows:
|
Alcoa Inc. |
The Coca-Cola Company |
Kroger |
|
AutoZone, Inc. |
Delta Air Lines |
Procter & Gamble |
|
Barnes & Noble, Inc. |
The Home Depot |
Walmart |
|
Caterpillar |
IBM |
Whirlpool Corporation |
1. Categorize each of the preceding companies as to whether its turnover ratio is likely
to be above or below 15.
2. Based on (1), identify a characteristic of companies with accounts receivable turnover ratios above 15.