Halliburton and Schlumberger compete in the oil field services sector. Refer to the following 2018 financial data
Question:
Halliburton and Schlumberger compete in the oil field services sector. Refer to the following 2018 financial data for the two companies to answer the requirements.
$ millions | HAL | SLB |
---|---|---|
Total revenue | $24,310 | $33,130 |
Cost of sales and services | 21,324 | 28,793 |
Average accounts receivable | 5,450 | 8,298 |
Average inventory | 3,027 | 4,343 |
Average accounts payable | 3,101 | 10,445 |
a. Compute the following measures for both companies.
1. AR Turnover and days sales outstanding (DSO)
Note: 1. Select the appropriate numerator and denominator used to compute AR turnover from the drop-down menu options. 2. Enter the numerator and denominator amounts to compute AR turnover.
Company | Numerator | Denominator | AR turnover | |
---|---|---|---|---|
AnswerTotal RevenueCost of sales and servicesAverage accounts receivableAverage inventoryAverage accounts payableAR turnoverInventory turnoverAP turnover | AnswerTotal RevenueCost of sales and servicesAverage accounts receivableAverage inventoryAverage accounts payableAR turnoverInventory turnoverAP turnover | |||
HAL | Answer | Answer | ||
SLB | Answer | Answer |
Note: 1. Select the appropriate numerator and denominator used to compute DSO from the drop-down menu options. 2. Enter the numerator and denominator amounts to compute DSO.
Company | Numerator | Denominator | DSO | |
---|---|---|---|---|
AnswerNumber of days in a quarterNumber of days in six monthsNumber of days in a year | AnswerTotal RevenueCost of sales and servicesAverage accounts receivableAverage inventoryAverage accounts payableAR turnoverInventory turnoverAP turnover | |||
HAL | Answer | Answer | ||
SLB | Answer | Answer |
2. Inventory Turnover and days inventory outstanding (DIO)
Note: 1. Select the appropriate numerator and denominator used to compute inventory turnover from the drop-down menu options. 2. Enter the numerator and denominator amounts to compute inventory turnover
Company | Numerator | Denominator | Inventory turnover | |
---|---|---|---|---|
AnswerTotal RevenueCost of sales and servicesAverage accounts receivableAverage inventoryAverage accounts payableAR turnoverInventory turnoverAP turnover | AnswerTotal RevenueCost of sales and servicesAverage accounts receivableAverage inventoryAverage accounts payableAR turnoverInventory turnoverAP turnover | |||
HAL | Answer | Answer | ||
SLB | Answer | Answer |
Note: 1. Select the appropriate numerator and denominator used to compute DIO from the drop-down menu options. 2. Enter the numerator and denominator amounts to compute DIO.
Company | Numerator | Denominator | DIO | |
---|---|---|---|---|
AnswerNumber of days in a quarterNumber of days in six monthsNumber of days in a year | AnswerTotal RevenueCost of sales and servicesAverage accounts receivableAverage inventoryAverage accounts payableAR turnoverInventory turnoverAP turnover | |||
HAL | Answer | Answer | ||
SLB | Answer | Answer |
3. AP Turnover and days payable outstanding (DPO)
Note: 1. Select the appropriate numerator and denominator used to compute AP turnover from the drop-down menu options. 2. Enter the numerator and denominator amounts to compute AP turnover.
Company | Numerator | Denominator | AP turnover | |
---|---|---|---|---|
AnswerTotal RevenueCost of sales and servicesAverage accounts receivableAverage inventoryAverage accounts payableAR turnoverInventory turnoverAP turnover | AnswerTotal RevenueCost of sales and servicesAverage accounts receivableAverage inventoryAverage accounts payableAR turnoverInventory turnoverAP turnover | |||
HAL | Answer | Answer | ||
SLB | Answer | Answer |
Note: 1. Select the appropriate numerator and denominator used to compute DPO from the drop-down menu options. 2. Enter the numerator and denominator amounts to compute DPO.
Company | Numerator | Denominator | DPO | |
---|---|---|---|---|
AnswerNumber of days in a quarterNumber of days in six monthsNumber of days in a year | AnswerTotal RevenueCost of sales and servicesAverage accounts receivableAverage inventoryAverage accounts payableAR turnoverInventory turnoverAP turnover | |||
HAL | Answer | Answer | ||
SLB | Answer | Answer |
4. Cash conversion cycle (CCC)
Cash | |||||
---|---|---|---|---|---|
Conversion | |||||
Company | DSO | DIO | DPO | Cycle | |
HAL | |||||
SLB |
Question | Company |
---|---|
b. Which company better manages its accounts receivable? | AnswerHALSLB |
c. Which company uses inventory more efficiently? | AnswerHALSLB |
d. Which company better manages its accounts payable? | AnswerHALSLB |
Financial Accounting
ISBN: 9780078110825
2nd Edition
Authors: J. David Spiceland, Wayne Thomas, Don Herrmann