Packaging Corporation of America produces containerboard and white papers. WestRock Co. manufactures paper products and corrugated products.
Question:
Packaging Corporation of America produces containerboard and white papers. WestRock Co. manufactures paper products and corrugated products. Financial statement data for these two companies follow:
Required:
1. Determine the receivables turnover ratios for both companies for 2016, 2017, and 2018.
2. Which company collected its accounts receivable more quickly in 2018?
3. How did the two companies’ accounts receivable collection change over the period presented?
4. How does the way we compute average accounts receivable—by averaging the beginning and ending balances—potentially distort the accounts receivable turnover ratio? How could this potential distortion be mitigated?
Step by Step Answer:
Financial Reporting And Analysis
ISBN: 9781260247848
8th Edition
Authors: Lawrence Revsine, Daniel Collins, Bruce Johnson, Fred Mittelstaedt, Leonard Soffer