Solution to BTN chapter 7 - Reporting in Action BTN 7-1 1...

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Reporting in Action BTN 7-1 1. Apple’s receivables at September 29, 2012, are $10,930 million. 2. Accounts receivable turnover for 2012 ($ millions) = 19.20 times 3. Average collection period = 365/ Turnover = 365 / 19.20 = 19.01 days 4. Liquid assets as a percent of current liabilities ($ millions) Sep. 29, 2012: 106.0 % Sep. 24, 2011: 114.8% Comments : Current liabilities are obligations that are due to be paid or liquidated within one year or one operating cycle of the business, whichever is longer. Typically, cash provided from the operations of the business during the year along with the existing liquid assets are used to satisfy these obligations. Looking solely at Apple’s ability to satisfy current obligations using cash, investments, and receivables, the company is in a slightly better position at September 24, 2011, as compared to September 29, 2012. In both years, however, Apple should not have difficulty satisfying its current liabilities with these liquid assets. As a benchmark, many prefer a ratio close to 100% for liquid assets divided by current liabilities.
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