Boise, Inc., manufactures packaging and paper products, including corrugated containers, protective packaging, and newsprint. KapStone Paper and Packaging Corporation manufactures unbleached kraft paper products and corrugated products. Financial statement data for these two companies follow:

 

Required:

1. Determine the receivables turnover ratios for both companies for 2009, 2010, and 2011.

2. Which company collected its accounts receivable more quickly in 2011?

3. Which company showed more improvement in accounts receivable collection over the period presented?

4. What factors might explain why these two companies, which operate in similar markets, have different accounts receivable turnover ratios?

5. 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?

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Boise, Inc. (in thousands of dollars) 2008 2009 2010 2011 Sales $1,935,410 185,110 $2,058,132 $2,364,024 188,589 Accounts receivable at December 31 $220,204 228,838 KapStone Paper and Packaging Corporation Sales $632,478 $782,676 $906,119 Accounts receivable at December 31 $71,489 58,408 66,640 108,320 Boise, Inc. (in thousands of dollars) 2008 2009 2010 2011 Sales $1,935,410 185,110 $2,058,132 $2,364,024 188,589 Accounts receivable at December 31 $220,204 228,838 KapStone Paper and Packaging Corporation Sales $632,478 $782,676 $906,119 Accounts receivable at December 31 $71,489 58,408 66,640 108,320

Answer rating: 100% (QA)

Step 1 of 9 A 1 Sales budget is a schedule showing expected sales in units and in dollars for the bu... View the full answer