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K. Total revenue - Average net fixed assets E13-7 Computing and Interpreting Selected Liquidity Ratios Double West Suppliers (DWS) reported sales for the year of
K. Total revenue - Average net fixed assets E13-7 Computing and Interpreting Selected Liquidity Ratios Double West Suppliers (DWS) reported sales for the year of $300,000, all on credit. The average gross profit percentage was 40 percent on sales. Account balances follow: Beginning Ending Accounts receivable (net) Inventory $45,000 60,000 $55,000 40,000 Required: 1. 2. Compute the turnover ratios for accounts receivable and inventory (round to one decimal place). By dividing 365 by your ratios from requirement 1, calculate the average days to collect receivables and the average days to sell inventory (round to one decimal place). Explain what each of these ratios and measures means for DWS. 3
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