Aer Lingus provides passenger and cargo transportation services from Ireland to markets in the United Kingdom, continental Europe, and the United States. It uses the euro as the monetary unit for financial reporting purposes. WestJet Airlines is a Canadian airline that serves more than 65 destinations, mainly in Canada but also in the United States, the Caribbean, and Mexico. The net sales and average balances of trade receivables for Aer Lingus and WestJet Airlines for a recent fiscal year are shown below:
1. Compute the following for each company for 2012:
a. The receivables turnover ratio.
b. The average collection period.
2. Based on your computations for (1), which company’s trade receivables appear to be the more “ liquid” asset? Explain.
3. The companies use different currencies to prepare their financial statements. Does the use of different currencies affect the interpretation of the receivables turnover ratio and the average collection period? Explain.

  • CreatedAugust 04, 2015
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