Janice Sampson is a financial analyst who has worked for a large Canadian brokerage firm for the past five years. Part of her job is to review as much information as she can for manufacturing companies in the fashion industry, especially the financial statements of a company.
She also analyzes economic information about the industry and the general economy. Based on her expectations about the company's future financial performance, Janice then advises the firm's clients whether or not to invest in a certain company.
Although not an accountant, Janice is very familiar with the financial reports issued by manufacturing companies in the fashion industry. A key focus is analyzing the current assets of a company. She is particularly interested in the accounts receivable turnover and the inventory turnover; she has found that these two ratios typically provide good information about anticipated trends and might signal upcoming cash flow concerns.
Starting in 2011, the companies Janice analyzed had to report their results under IFRS. Although she was aware that reporting current assets under IFRS was not much different from reporting under ASPE, Janice was interested in knowing about any differences that might exist, and how the change to IFRS might impact her analysis of accounts receivable turnover and inventory turnover.
Required
Prepare a brief report outlining the differences in reporting accounts receivable and inventory under IFRS and ASPE. Will the change to IFRS have any impact on the calculation of accounts receivable turnover and inventory turnover?