Question: Problem 5: When comparing two companies, you determine that Company 1 has a receivables turnover of 8.5 while Company 2 has a receivables turnover 12.1.

Problem 5: When comparing two companies, you determine that Company 1 has a receivables turnover of 8.5 while Company 2 has a receivables turnover 12.1. Discuss which company has better efficiency related to receivables? Discuss what this means in terms of the number of days it takes each company to collect its outstanding receivables.

Problem 6 : You and a classmate are reviewing the financial statements from two different companies. The debt to equity ratio for Firm A is 3.0 while the debt to equity ratio for Firm B is 0.6. Explain what this means in terms of how the company has decided to finance its business. Discuss which firm has more financing related risk.

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