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365f5.36= 63.09 D0115 or 63 Dag I lnve ntory Tomover Iventory Turnover = Net Credit Sales f Average Accounts Receivable 3'70! 130 = 4.28 times
365f5.36= 63.09 D0115 or 63 Dag I lnve ntory Tomover Iventory Turnover = Net Credit Sales f Average Accounts Receivable 3'70! 130 = 4.28 times 1 Average Sale Period verage Sale Period = 365 f Accounts Receivable Ratio 3634.28 = 85.28 or 35 days B. Short Term Liquidity Position urrent Ratio Anoiysi It shows company has 2.38 times current assets to pay off their short arm obligation or those due within a year [current liabilities}. The shortterm liquidity osition is stable. v'ith Acid test Ratio at 1.47, it means that company can pay off all of the current liabilities rith quick assets E. Company performance in comparison to other industry Ire: industry average for ollection is 45 days and inventory turnover is 6 times) _ short collection period shows quicker collection and better cash flow of receivables. A mger collection period may negatively affect the shortterm debt liquidity of company. Whether a collection period is good or bad depends on the credit terms allowed by the n..-.......... F...- ._-............I.. LI! l-L... \"I'M...\" null....J_" nnnnn 3...! .. ..-. \"an\"...u. :. {H ..l..-....... -n..l l-L
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