Question

Comparative figures for Apple and Google follow.

Apple Google

Current One Year Two Years Current One Year Two Years

\( millions Year Prior Prior Year Prior Prior

Accounts receivable, net \) 16,849 \( 17,460 \) 13,102 \( 11,556 \) 9,383 $ 8,882

Net sales 233,715 182,795 170,910 74,989 66,001 55,519

Required

1. Compute the accounts receivable turnover for Apple and Google for each of the two most recent years using the data shown.

Short answer

Current Year

• Apple : 13.62
• Google: 7.16

One year prior

• Apple : 11.96
• Google : 7.23

Step-by-step solution

Accounts receivable turnover for Apple.

$\begin{array}{rcl}\mathit{A}\mathit{c}\mathit{c}\mathit{o}\mathit{u}\mathit{n}\mathit{t}\mathit{s}\mathbf{}\mathit{r}\mathit{e}\mathit{c}\mathit{e}\mathit{i}\mathit{v}\mathit{a}\mathit{b}\mathit{l}\mathit{e}\mathbf{}\mathit{t}\mathit{u}\mathit{r}\mathit{n}\mathit{o}\mathit{v}\mathit{e}\mathit{r}\mathbf{}\mathit{r}\mathit{a}\mathit{t}\mathit{i}{\mathit{o}}_{\mathbf{C}\mathbf{u}\mathbf{r}\mathbf{r}\mathbf{e}\mathbf{n}\mathbf{t}\mathbf{}\mathbf{y}\mathbf{e}\mathbf{a}\mathbf{r}}& \mathbf{=}& \frac{\mathbf{S}\mathbf{a}\mathbf{l}\mathbf{e}\mathbf{s}}{\mathbf{A}\mathbf{v}\mathbf{e}\mathbf{r}\mathbf{a}\mathbf{g}\mathbf{e}\mathbf{}\mathbf{a}\mathbf{c}\mathbf{c}\mathbf{o}\mathbf{u}\mathbf{n}\mathbf{t}\mathbf{s}\mathbf{}\mathbf{r}\mathbf{e}\mathbf{c}\mathbf{e}\mathbf{i}\mathbf{v}\mathbf{a}\mathbf{b}\mathbf{l}\mathbf{e}\mathbf{s}}\\ & \mathbf{=}& \frac{\mathbf{\$}\mathbf{233}\mathbf{,}\mathbf{715}}{\left({\displaystyle \frac{\$16,849+\$17,460}{2}}\right)}\\ & \mathbf{=}& \frac{\mathbf{\$}\mathbf{233}\mathbf{,}\mathbf{715}}{\mathbf{\$}\mathbf{17}\mathbf{,}\mathbf{154}\mathbf{.}\mathbf{50}}\\ & \mathbf{=}& \mathbf{13}\mathbf{.}\mathbf{62}\mathit{t}\mathit{i}\mathit{m}\mathit{e}\mathit{s}\end{array}$

$\begin{array}{rcl}\mathit{A}\mathit{c}\mathit{c}\mathit{o}\mathit{u}\mathit{n}\mathit{t}\mathit{s}\mathbf{}\mathit{r}\mathit{e}\mathit{c}\mathit{e}\mathit{i}\mathit{v}\mathit{a}\mathit{b}\mathit{l}\mathit{e}\mathbf{}\mathit{t}\mathit{u}\mathit{r}\mathit{n}\mathit{o}\mathit{v}\mathit{e}\mathit{r}\mathbf{}\mathit{r}\mathit{a}\mathit{t}\mathit{i}{\mathit{o}}_{\mathit{O}\mathit{n}\mathit{e}\mathbf{}\mathbf{year}\mathbf{}\mathbf{prior}}& \mathbf{=}& \frac{\mathbf{Sales}}{\mathbf{Average}\mathbf{}\mathbf{accounts}\mathbf{}\mathbf{receivables}}\\ & \mathbf{=}& \frac{\mathbf{\$}\mathbf{182}\mathbf{,}\mathbf{795}}{\left({\displaystyle \frac{\$17,460+\$13,102}{2}}\right)}\\ & \mathbf{=}& \frac{\mathbf{\$}\mathbf{182}\mathbf{,}\mathbf{795}}{\mathbf{\$}\mathbf{15}\mathbf{,}\mathbf{281}}\\ & \mathbf{=}& \mathbf{11}\mathbf{.}\mathbf{96}\mathit{t}\mathit{i}\mathit{m}\mathit{e}\mathit{s}\end{array}$

Accounts receivable turnover for Google.

$\begin{array}{rcl}\mathit{A}\mathit{c}\mathit{c}\mathit{o}\mathit{u}\mathit{n}\mathit{t}\mathit{s}\mathbf{}\mathit{r}\mathit{e}\mathit{c}\mathit{e}\mathit{i}\mathit{v}\mathit{a}\mathit{b}\mathit{l}\mathit{e}\mathbf{}\mathit{t}\mathit{u}\mathit{r}\mathit{n}\mathit{o}\mathit{v}\mathit{e}\mathit{r}\mathbf{}\mathit{r}\mathit{a}\mathit{t}\mathit{i}{\mathit{o}}_{\mathbf{Current}\mathbf{}\mathbf{year}}& \mathbf{=}& \frac{\mathbf{Sales}}{\mathbf{Average}\mathbf{}\mathbf{accounts}\mathbf{}\mathbf{receivables}}\\ & \mathbf{=}& \frac{\mathbf{\$}\mathbf{74}\mathbf{,}\mathbf{989}}{\left({\displaystyle \frac{\$11,556+\$9,383}{2}}\right)}\\ & \mathbf{=}& \frac{\mathbf{\$}\mathbf{74}\mathbf{,}\mathbf{989}}{\mathbf{\$}\mathbf{10}\mathbf{,}\mathbf{469}\mathbf{.}\mathbf{50}}\\ & \mathbf{=}& \mathbf{7}\mathbf{.}\mathbf{16}\mathit{t}\mathit{i}\mathit{m}\mathit{e}\mathit{s}\end{array}$

$\begin{array}{rcl}{\mathbf{Accountsreceivableturnoverratio}}_{\mathbf{Oneyearprior}}& \mathbf{=}& \frac{\mathbf{Sales}}{\mathbf{Averageaccountsreceivables}}\\ & \mathbf{=}& \frac{\mathbf{\$}\mathbf{66}\mathbf{,}\mathbf{001}}{\left(\frac{\mathbf{\$}\mathbf{9}\mathbf{,}\mathbf{383}\mathbf{+}\mathbf{\$}\mathbf{8}\mathbf{,}\mathbf{882}}{\mathbf{2}}\right)}\\ & \mathbf{=}& \frac{\mathbf{\$}\mathbf{66}\mathbf{,}\mathbf{001}}{\mathbf{\$}\mathbf{9132}\mathbf{.}\mathbf{50}}\\ & \mathbf{=}& \mathbf{7}\mathbf{.}\mathbf{23}\mathbf{times}\end{array}$