Financial Receivable Turnover ( Net Sales / Ending Accounts Receivable

Financial leverage is the ability of the company to maneuver with financing options to meet the obligations (Investopedia, 2012). There are two leverage ratios that were analyzed for this financial statement 1) debt ratio and 2) debt-to-equity ratio.

To consider this we need net credit sales and average receivable balance. This ratio indicates average collection period should be consistent with corporate credit policy. An increase suggests a decline in financial health of customers.

Accounts Receivable Turnover: This ratio decreased, but had a substantial jump to be at 6.35 in 2013.

Accounts receivable are amounts owed by customers on account. They result from the sale of goods and services on credit. These receivables are generally expected to be collected within 30 to 60 days. They are typically the most significant type of claim held by a company. Accounts receivable and notes receivable resulting from sales are also known as trade receivables. Accounts receivable resulting from sales are referred to as trade receivables in Alcatel's financial statements.

J reflects department store chain. This industry is a retail business; therefore, there is a large amount of inventories. This industry also has high accounts receivable because usually customers pay with credit cards which are billed at the end of the month. However, sometimes, customers forget to pay their bills on time, and the bills are brought to next month. Therefore, the collection period is approximately 2 months.

The assessment of Bradmark’s internal controls over its revenue cycle procedures were done through the

Sonic receivable turnover ratio is 12 days it’s account receivable over every 12 days a year. In regards to this ratio it’s very low and it could mean that they do a lot of credit, which could hurt their profit.

Starbucks Corps had its gross account receivables for the year 2015 increase by 14.44% which led to its net receivables increase by $88,000,000 which translates to an increase of 13.95% of the net account receivables. This was followed by an increase in doubtful debts through the previous year by 6.12% to %6,700,000 from the ear 2014. This is due to the increase in the number also sales which led to the increase in account receivables and also doubtful debts in 2015. The risk that the company undertook also increases in line with the increase in account receivables.

11. Accounts receivable turnover and days sales in accounts receivable for the last three years:

Receivables Turnover: This shows the degree of realization in accounts receivables. Company N has a lower turnover rate, a lower rate implies that receivables are being held longer and the less likely they are to be collected. Also there is an opportunity cost of tying up funds in receivables for a long period of time. Company M is 29 times higher than company N.

Inventory turnover in days is an assistant figure of inventory turnover. The shorter of the days, the faster of the inventory turning to cash, and the better use of short-term capital. This figure of the firm was very high in 2001 and began to fell down from 2002,then lower than industry in 2004 and 2005.This indicates the management of the firm became better.

In order to test his hypothesis, the author followed the Dechow and Dichev (2002), which examines the standard deviations of residuals from a regression of accounts receivable accruals on corresponding cash flow realizations. The model uses information related to accounts receivable, sales cash collected during the periods, and errors in accounts receivable accruals (sresid). The author

Evaluating management effectiveness, the asset utilization ratios assess daily operating performance. Indicating a quicker collection turnover on outstanding debt, Google has a higher receivables turnover than Apple. Although, Google takes longer to collect accounts receivable, or average collection period, than Apple. Similarly, analysis reveals Google has double the higher inventory turnover than Apple. Comparing the fixed asset turnover reveals that Google gains 2.64 dollars for each dollar in fixed assets, whereas Apple generates 7.98 dollars. The total asset turnover tells that Apple outperformed Google by generating 67 cents for every dollar of assets.

Apple had nearly $137 billion of cash at the end of Dec 2012. Over the past few years, the Company had been highly successful with the launch of the iPhone 3G in 2008, and which was followed by the launch of iPad in 2010. The Company enjoyed high profitability, and was able to keep its costs at a minimum. The gross margin on the iPhone was between 49% and 58% from October 2010 to March 2012, and the gross margin on the iPad was between 23% and 32% in the same time period. Apple’s capital structure included no debt; hence, there was no outflow of cash for making interest payments.

The inventory turnover is the total number of turns of selling merchandise in one year. It is calculated by dividing the cost of goods by the average inventory in one year. Normally, the average inventory turnover in the most firms is the same. The inventory turnover rate varies from one industry to another. However, the inventory turnover for the food stores may be higher than the furniture stores and other firms. Target is one of the best retail stores that sell general merchandise beside food and drug products. Target’s reputation has been built over many years and through their organized effort. Target’s goal is to sell goods and services to satisfy the society’s needs and increase profit. Target’s mission is “outstanding value, continuous innovation and exceptional guest experience by consistently fulfilling our Expect More. Pay Less. ® brand promise.” (Retrieved retailindustry.about.com) (Farfan, 2015). Target followed its mission exactly as it stated above to stay alert and focused to achieve its goal.