The following information was summarized from a recent annual report of The Hershey Company: (In thousands) Accounts

Question:

The following information was summarized from a recent annual report of The Hershey Company:
(In thousands)
Accounts receivable-trade:
December 31, 2010 $......................................................390,061
December 31, 2009...........................................410,390
Net sales for the year ended:
December 31, 2010.........................................5,671,009
December 31, 2009.........................................5,298,668
The following information was summarized from a recent annual report of Kraft Foods, Inc.:
(In millions)
Receivables, net of allowances of $246 and $121, respectively
December 31, 2010...........................................$ 6,539
December 31, 2009.............................................5,197
Net revenues for the year ended:
December 31, 2010............................................49,207
December 31, 2009............................................40,386
Required
1. Calculate the turnover ratios for The Hershey Company and Kraft Foods, Inc., for the most recent year.
2. Calculate the average collection period, in days, for both companies for the most recent year. Comment on the reasonableness of the collection periods for these companies considering the nature of their business.
3. Which company appears to be performing better? What other information should you consider in determining how these companies are performing?
Accounts Receivable
Accounts receivables are debts owed to your company, usually from sales on credit. Accounts receivable is business asset, the sum of the money owed to you by customers who haven’t paid.The standard procedure in business-to-business sales is that...