The following information is available for a company for the current year:Net Sales Revenue$ 345,000Cost of Goods Sold205,000Average Accounts Receivable32,500Average Inventory9,450Average Net Fixed Assets81,250Average Total Assets130,000 Required:Part a. Calculate the receivables turnover ratio for the current year.Part b. Calculate the days to collect for the current year.Part c. Calculate the inventory turnover ratio for the current year.Part d. Calculate the days to sell for the current year.Round all ratios to two decimal points.
What will be an ideal response?
Part a
Receivables turnover ratio = Net sales ÷ Average net receivables
= $345,000 ÷ $32,500 = 10.62
Part b
Days to collect = 365 ÷ Receivables turnover ratio
= 365 ÷ 10.62 = 34.37
Part c
Inventory turnover ratio = Cost of goods sold ÷ Average inventory
= $205,000 ÷ $9,450 = 21.69
Part d
Days to sell ratio = 365 ÷ Inventory turnover
= 365 ÷ 21.69 = 16.83
You might also like to view...
Describe the difference between a general warranty and a specific warranty.
What will be an ideal response?
Competition in the labour market for people with various skills is a product market factor that shapes external competitiveness.
Answer the following statement true (T) or false (F)
Many people consider financial independence to be their most important financial goal
Indicate whether the statement is true or false.
A trade name cannot be protected if it is unusual or fanciful.
Answer the following statement true (T) or false (F)