An Analyst Is Comparing Financial Results at Two Canadian Companies

Multiple Choice

An analyst is comparing financial results at two Canadian companies that only have domestic sales. The Metro Canoe Company manufactures and sells canoes. The Country Ski Company manufactures and sells snow skis. Both companies have about the same gross margins, level of sales, credit policies, and have chosen December 31 as their fiscal year end. Which of the following statements is likely to be correct?

A) The average inventory turnover period will be lower for Metro Canoe.
B) The average inventory turnover period will be lower for Country Ski.
C) The average collection period for receivables will be higher for Metro Canoe.
D) The average collection period for receivables will be lower for Country Ski.
E) The sales revenue to capital employed will be the same for both companies.