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 2006 for two large pharmaceutical companies—one American, Pfizer, Inc., and one Swiss, Roche—are presented next (in millions).15
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 2005 were $9,103 for Pfizer and SF7,698 for Roche. Inventories in 2005 were $5,478 for Pfizer and SF5,041 for Roche. Accounts payable in 2005 were $2,073 for Pfizer and SF2,373 for Roche.) Prepare a memo containing your analysis of the operating cycles of these companies.
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...
Step by Step Answer:
Financial and Managerial Accounting
ISBN: 978-1439037805
9th edition
Authors: Belverd E. Needles, Marian Powers, Susan V. Crosson