Stanley Corporation has no material problem with uncollectible accounts or obsolete inventory. All sales and purchases are on account. The company provided the following information for the year ending 20X7:

(a) Calculate the "accounts receivable turnover ratio."

(b) Calculate the "inventory turnover ratio."

(c) If Stanley's competitors have a receivables turnover ratio of "6" and an_ inventory turnover ratio of "4," would you initially conclude that Stanley is better or worse than its competitors in managing receivables and inventory?

Transcribed Image Text:

Total sales $2,600,000 Beginning accounts receivable 700,000 Total purchases of inventory 1,800,000 Beginning inventory 50,000 Collections on accounts receivable 2,400,000 Payments on accounts payable 1,850,000 Cost of goods sold 1,775,000