Answer- 5)-Times interest earned ratio= 33.85 times.
Explanation- Times interest earned ratio = Income before Interest & Taxes(EBIT)/Interest expenses
= ($896700+$39000+$384300)/$39000
= $1320000/$39000
= 33.85 times
6)- Average collection period =26.1 times.
Explanation- Average collection period = 365 days/Accounts receivable turnover
= 365 days/14 times
= 26.1 days
Accounts receivable turnover = Sales on account /Average accounts receivable
=$3220000/ ($220000+$240000)/2
=$3220000/$230000
= 14 times
7)- Average sale period =83.0 days.
Explanation- Average sale period = 365 days/Inventory turnover
= 365 days/ 4.4 times
=83.0 days
Inventory turnover = Cost of goods sold/Average inventory*
= $1320000/( $280000+$320000)/2
= $1320000/$300000
= 4.4 times
8)- Operating cycle =109.1 days.
Explanation- Operating cycle = Average sale period + Average collection period
= 83.0 days+ 26.1 days
=109.1 days
5. Times interest earned ratio. (Round your answer to 2 decimal places.) Times interest earned ratio...
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