Financial Statement Analysis: Columbia Sportswear and VF Corporation

Financial Ratio Calculations for VF and Columbia

 
  • Student: Podrick Cardamom
  • Textbook: ACC 291
  • Course: Accounting II – Week 1
 

Analysis providing conclusions concerning the management of accounts receivable based on the financial statements of Columbia Sportswear Company presented in Appendix Band the financial statements of VF Corporation presented in Appendix C, including the following:

Financial Ratio Calculations – Columbia Sportswear

Sales 2014 AR 2013 AR
2,100,590 344,390 306,878
  • Receivables Turnover: 6.45
  • Average Collection Period: 56.58

Financial Ratio Calculations – VF Corporation

Sales 2014 AR 2013 AR
12,154,784 1,276,224 776,403
  • Receivables Turnover: 11.84
  • Average Collection Period: 30.82

What conclusions concerning the management of accounts receivable can be drawn from this data?

The receivables turnover ratio is nearly two times higher for YF Corporation than Columbia Sportswear. This means that YF sells more merchandise on a cash basis and is more conservative about extending credit to customers. Columbia is more likely to sell items on credit, which may increase revenue, but also carries a higher risk of loss.

The average collection period estimates the number of days that will pass for a credit sale to be paid in cash. As expected, YF has a lower turnover ratio, which means their receivables will take less time to be paid on average compared to Columbia.

 

Your browser is out of date. It has security vulnerabilities and may not display all features on this site and other sites.

Please update your browser using one of modern browsers (Google Chrome, Opera, Firefox, IE 10).

X