Ratio analysis enables one to compare the performance of companies whose financial statements are presented in different
Question:
Ratio analysis enables one to compare the performance of companies whose financial statements are presented in different currencies. Selected data from 2005 for two large pharmaceutical companies—one American, Pfizer, Inc., and one Swiss, Roche—are presented below (in millions).
For each company, calculate the receivable turnover, days’ sales uncollected, inventory turnover, days’ inventory on hand, payables turnover, and days’ payable. Then determine the operating cycle and days of financing required for each company. (Accounts receivable in 2004 were $9,367 for Pfizer and SF7,014 for Roche. Inventories in 2004 were $6,660 for Pfizer and SF4,614 for Roche. Accounts payable in 2004 were $2,672 for Pfizer and SF1,844 for Roche.) Prepare a memo containing your analysis of the operating cycles of thesecompanies.
Financial StatementsFinancial statements are the standardized formats to present the financial information related to a business or an organization for its users. Financial statements contain the historical information as well as current period’s financial...
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Managerial Accounting
ISBN: 978-0618777181
8th Edition
Authors: Susan V. Crosson, Belverd E. Needles