Question

Topic: Compute and interpret turnover ratios for two years LO: 3 8. Selected recent balance sheet and income statement information for Holiday Corporation follows: (in millions) Average inventory Average accounts receivable Average accounts payable Sales Cost of goods sold 2016 $ 13,808 34,642 28.100 300,893 230,170 2015 $ 13,958 36,706 29.116 318,113 242,780 A Calculate accounts receivable turnover (ART) for 2016 and 2015. Has ART improved during the year or worsened? B. Calculate inventory turnover (INVT) for 2016 and 2015. Has INVT improved during the year or worsened?

Answer 1

Accounts Receivable Turn over ratio slightly Imporved

Requirement: A Year 17 Numerator Net Credit sales 300893 318113 Accounts Recievable Turn over ratio Denominator Average Account Recievable 34642 36706 Account Recievable ratio Account Recievable ratio 8.69 times 8.67 times 2016 2015

Year / = Numerator Cost of goods sold 230170 242780 Inventory turn over ratio Denominator Average Inventory 13808 13958 Inventory Turn over ratio Inventory Turn over ratio 16.67 times 17.39 times 2016 2015
During the year Inventory turn over ratio is worsed.