The following selected financial information for a company was reported for the current year end. Calculate the following company ratios:(a) Accounts receivable turnover.(b) Inventory turnover.(c) Days' sales uncollectedAccounts receivable, beginning-year $170,000Accounts receivable, year-end 190,000Merchandise inventory, beginning-year80,000Merchandise inventory, year-end60,000Cost of goods sold580,000Credit sales1,000,000
What will be an ideal response?
(a) Accounts receivable turnover = $1,000,000/[($170,000 + $190,000)/2] = 5.6 times
(b) Inventory turnover = $580,000/[($80,000 + $60,000)/2] = 8.3 times
(c) Days' sales uncollected = ($190,000/$1,000,000) * 365 = 69.35 days
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