Question

The 2021 income statement of Anderson Medical Supply Company reported net sales of $11 million, cost of goods sold of $5.7 million, and net income of $845,000. The following table shows the company's comparative balance sheets for 2021 and 2020:

The 2021 income statement of Anderson Medical Supply Company reported net sales of $11 million, cost of goods sold of $5.7 million, and net income of $845,000. The following table shows the company's comparative balance sheets for 2021 and 2020: ($ in thousands) 2021 2020 $ 480 $ 560 880590 1,350 1,150 3,300 3,020 $ 6,010 $5,320 Assets Cash Accounts receivable Inventory Property, plant, and equipment (net) Total assets Liabilities and shareholders' equity Current liabilities Bonds payable Common stock Retained earnings Total liabilities and shareholders' equity $ 1,140 1,650 1,900 1,320 $ 6,010 $ 1,010 1,650 1,900 760 $5,320 Required: 1. Calculate Anderson's turnover ratios for 2021. (Use 365 days a year. Round your answers to 2 decimal places.) Inventory turnover ratio Receivables turnover ratio Average collection period Asset turnover ratio times times days times = Untitled - Paint

Answer 1

1. Inventory turnover ratio = Cost of goods sold / average inventory

= 5.7 /(1.35+1.15)/2

= 4.56 times

2. Receivable turnover ratio = Sales / average accounts receivable

= 11/(0.88+0.59)/2

= 14.97 times

3. Average collection period = 365 / receivable turnover ratio

= 365 / 14.97

= 24.38 days

4. Asset turnover ratio = Sales / average total assets

= 11/(6.01+5.32)/2

= 1.94 times