Jim Short's Company makes clothing for schools. Sales in 20X1 were $4,820,000. Assets were as follows: Cash.................................................$
Question:
Jim Short's Company makes clothing for schools. Sales in 20X1 were $4,820,000. Assets were as follows:
Cash.................................................$ 163,000
Accounts receivable....................................889,000
Inventory..............................................411,000
Net plant and equipment............................520,000
Total assets........................................$1,983,000
a. Compute the following:
1. Accounts receivable turnover.
2. Inventory turnover.
3. Fixed asset turnover.
4. Total asset turnover.
b. In 20X2, sales increased to $5,740,000 and the assets for that year were as follows:
Cash................................................$ 163,000
Accounts receivable..................................924,000
Inventory.............................................1,063,000
Net plant and equipment...............................520,000
Total assets........................................$2,670,000
Once again, compute the four ratios.
c. Indicate if there is an improvement or decline in total asset turnover, and based on the other ratios, indicate why this development has taken place.
Accounts ReceivableAccounts receivables are debts owed to your company, usually from sales on credit. Accounts receivable is business asset, the sum of the money owed to you by customers who haven’t paid.The standard procedure in business-to-business sales is that...
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Jim Shorts Company a 1 Accounts receivable turnover Sa...View the full answer
Foundations of Financial Management
ISBN: 978-1259277160
16th edition
Authors: Stanley Block, Geoffrey Hirt, Bartley Danielsen
