Homework Answers
Given:
Sales = $ 830,000
Cost Of Goods Sold = $ 525,000
Opening Balances:
Accounts Receivables = $ 80,000 And Inventory = $ 100,000
Closing Balances:
Account Receivables = $ 86,000 And Inventory = $ 105,000
Answer:
Average Account Receivables = (80,000+86,000)/2 = $ 83000
Average Inventory = (100,000+105,000)/2 = $ 102,500
Therefore,
A) No of Days sales was in Inventory (Stock Turnover Ratio) = (Average Inventory/Cost Of Goods Sold)*365 Days
No of Days sales was in Inventory (Stock Turnover Ratio) = (105,000/525,000)*365 = 73 Days
B) No of Days sales was in Accounts Receivables (Debtors Turnover Ratio) = (Avg Account Receivables/Sales)*365 Days
No of Days sales was in Accounts Receivables (Debtors Turnover Ratio) = (83000/830000)*365 Says = 36.5 Days.
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In the most recent year, the firm had sales of $6,000 with a
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