Best Buy Co., Inc., the electronics and appliance chain, reported these figures in millions of dollars:
|
2006 |
2005 |
|
|
Net sales |
$30,848 |
$27,433 |
|
Receivables at end of year |
506 |
375 |
Required
1. Compute Best Buy’s average collection period during 2006.
2. Is Best Buy’s collection period long or short? Hewlett Packard takes 41 days to collect its average level of receivables. FedEx, the overnight shipper, takes 38 days. What causes Best Buy’s collection period to be so different? (Challenge)