Presented here is selected financial information (in millions) from the 2011 financial statements of Rogers Communications Inc. and Shaw Communications Inc.:
__________________________________________________ Rogers _______ Shaw
Sales ..........................................................................................$12,428 .......$4,740.9
Allowance for doubtful accounts, beginning of year ................. 138 ............19.0
Allowance for doubtful accounts, end of year .......................... 129 ............28.8
Accounts receivable balance (net), beginning of year ............. 1,443 ...........196.4
Accounts receivable balance (net), end of year .................... 1,574 ...........442.8
Instructions
(a) Calculate the receivables turnover and average collection period for both companies.
(b) Comment on the difference in their collection experiences.
TAKING IT FURTHER
Shaw acquired Canwest Global Communications Corp. in October 2010. As part of the transaction, Shaw acquired $296.6 million of receivables. What impact might this acquisition have on its 2011 receivable turnover ratio? Note that Shaw's fiscal year end was August 31, 2011. Explain.