Refer to the Sexton Company information in Exercise 13-6. The company’s income statements for the years ended December 31, 2006 and 2005, follow. Assume that all sales are on credit and then compute: (1) days’ sales uncollected, (2) accounts receivable turnover, (3) inventory turnover, and

(4) days’ sales in inventory. Comment on the changes in the ratios from 2005 to 2006.

Transcribed Image Text:

2006 2005 Sales $672,500 $530,000 Cost of goods sold $410,225 $344,500 Other operating expenses 208,550 133,980 Interest expense 11,100 12,300 Income taxes 8,525 7,845 Total costs and expenses 638,400 Net income $ 34,100 498,625 $ 31,375 Earnings per share $ 2.10 $ 1.93