Microsoft Corporation (Microsoft) and Oracle Corporation (Oracle) engage in the design, manufacture, and sale of computer software. Microsoft sells and licenses a wide range of systems and application software to businesses, computer hardware manufacturers, and consumer retailers. Oracle sells software for information management almost exclusively to businesses. Exhibit 4.23 presents selected data for the two firms for three recent years.

REQUIRED
a. Calculate the accounts receivable turnover ratio for Microsoft and Oracle for Year 1, Year 2, and Year 3.
b. Suggest possible reasons for the differences in the accounts receivable turnovers of Microsoft and Oracle during the three-year period.
c. Suggest possible reasons for the trends in the accounts receivable turnover for the two firms over the three-year period.

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Exhibit 4.23 Selected Data for Microsoft and Oracle (amounts in millions) (Problem 4.16) Year 2 Year 3 Year 1 Microsoft $60,420 $58,437 $51,122 Sales Average accounts receivable Change in sales from previous year 12,391 12,464 10,327 (3.3)% +15.5% +18.2% Oracle Sales $23,252 $22,430 $17,996 Average accounts receivable Change in sales from previous year 4,430 5,799 4,589 +25.2% +3.7% +24.6%