AutoZone, Inc., claims to be “the nation’s leading auto parts retailer.” It sells replacement auto parts directly to the consumer. BorgWarner, Inc. , has over 17,000 employees and produces automobile parts, such as transmissions and cooling systems, for the world’s vehicle manufacturers. The following data were taken from these companies’ 2010 annual reports. All dollar amounts are in thousands.

Required

a. Before performing any calculations, speculate as to which company will take the longest to collect its accounts receivables. Explain the rationale for your decision.

b. Calculate the accounts receivable turnover ratios for AutoZone and BorgWarner.

c. Calculate the average days to collect accounts receivables for AutoZone and BorgWarner.

d. Do the calculations from Requirements b and c confirm your speculations in Requirement a?

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AutoZone August 30, 2010 BorgWaner December 31, 2010 Sales Accounts receivable $7,362,618 $5,652,800 125,802 859,500