Question

QUESTION 14: If a firm turns over its average inventory of $59,389,000 five times (IT=5), and the gross profit margin is 58%, what is the total revenue (sales)?

		$707 million
		$645 million
		$693 million
		$775 million
		none of these

QUESTION 15: Trico Corporation’s DSO is 28.6 days. If the accounts receivable total $3,840,000, What would the firm’s annual sales be?

		$19.893 million
		$49.007 million
		$59.390million
		$38.908 million
		none of these

QUESTION 16: The target capital structure is the

		projects that form the goal for the coming year
		set of strategic objectives of the firm over the next 5-10 years
		mix of capital components used in fundraising for projects
		systematic repayment of debt through equal periodic payments

Answer 1

14)

Cost of goods sold % = 100% - Gross profit % = 100% - 58% = 42%

Cost of goods sold = Average Inventory X Inventory tunrover

= 59.389 Million x 5

= 296.945 Million

Sales = Cost of goods sold / Cost of goods sold %

= 296.945 / 42%

= 707.01 Million

Correct choice A

15)

Annual sales = Receivables * 365/ Days of sales in hand

= 3.84 Million x (365/28.60)

= 49.007 Million

Correct choice B

16)

Target capital structure defines the mix of proposed debt and equity in the capital structure

Correct choice C