Question
1. Calculate Account rececivable turnover for both 2014 and 2015 using this formula
Sales/Accounts Receivable

2. Calculate Account payable turnover for both 2014 and 2015 using this formula
Cost of Goods Sold/Accounts Payable

3. calculate Return of Equity for both 2014 and 2015 using this formula
Net Income/Common Equity

2017. Review the following financial data, and then answer the questions below. Company X Income Statement FYE 2014 and 2015
31-Jan-15 31-Jan-14 $9.135.000 6,778,000 45,141,000 2,224,000 63,278,000 116,655,000 18,102,000 5,671,000 203.706,000 $7 281,
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Answer #1

Solution:        

Statement showing calculation of various ratios from the given financial data in the problem:

Ratio

Comment

Formula

Year

2015

2014

Account Receivable Turnover

It measures the efficiency at which the firm is managing its receivables.

Sales

Accounts Receivables

(Sales/Accounts Receivables)

$485,651,000

$6,778,000

= 71.65

$476,294,000

$6,677,000

=71.33

Account Payable Turnover

It measures the efficiency at which the firm is managing its payables.

Cost of Goods Sold

Accounts Payable

(Cost of Goods Sold/Accounts Payable)

$365,086,000

$58,583,000

= 6.23

$358,069,000

$57,174,000

= 6.26

Return of Equity

It indicates earnings available to equity shareholders in comparison to equity shareholders’ net worth.

Net Income

Common Equity

(Net Income/Common Equity)

$16,303,000

$81,394,000

= 0.20

$16,169,000

$77,746,000

= 0.21

Note : Answer figures are rounded up to 2 decimals.

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