Selected balances from a company's financial statements are shown below. Calculate the following ratios for Year 2:(a) accounts receivable turnover(b) inventory turnover(c) days' sales uncollected(d) days' sales in inventory(d) profit margin.(e) return on total assets.?Dec. 31,Dec. 31,For ?Year 2Year 1Year 2Accounts receivable$ 27,000$ 24,000?Merchandise inventory25,00020,000?Total assets296,000244,000?Accounts payable26,00032,000?Salaries payable3,0004,400?Sales (all on credit)??$312,000Cost of goods sold??165,600Salaries expense??48,000Other expenses??75,000Net income??24,000
What will be an ideal response?
| (a) Accounts receivable turnover = $312,000/(($27,000 + $24,000/)2) | 12.2 times |
| ? | ? |
| (b) Inventory turnover = $165,600/(($25,000 + $20,000)/2) = | 7.4 times |
| ? | ? |
| (c) Days' sales uncollected = ($27,000/$312,000) * 365 = | 31.6 days |
| ? | ? |
| (d) Days' sales in inventory = ($25,000/$165,600) * 365 | 55.1 days |
| ? | ? |
| (d) Profit margin = ($24,000/$312,000) * 100 = | 7.7% |
| ? | ? |
| (d) Return on total assets = $24,000/[($296,000 + $244,000)/2] = ? | 8.9% |
Business
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