Procter & Gamble (P&G) manufactures and markets many products you use every day. In 2016, sales for the company were $65,300 (all amounts in millions). The annual report did not report the amount of credit sales, so we will assume that all sales were on credit. The average gross profit percentage was 49.6 percent. Account balances for the year follow:

Required:

1. Rounded to one decimal place, compute the turnover ratios for accounts receivable and inventory. 

2. By dividing 365 by your ratios from requirement 1, calculate the average days to collect receivables and the average days to sell inventory.

3. Interpret what these ratios and measures mean for P&G.

Transcribed Image Text:

Ending Beginning Accounts receivable (net) $4,400 $4,600 Inventory 4,700 5,000