Question
Referring to the following data of the Omani Company, that extracted from the balance sheet at 31122019, answer the following questions: - (Note; Write all
Referring to the following data of the Omani Company, that extracted from the balance sheet at 31\12\2019, answer the following questions: - (Note; Write all Equations regarding the questions)
- The company manager targets to reduce the current ratio in the year (2020) by 33% from the previous year (2019), this requiring to downsize the amount of the total current asset. To what level can the manager reduce the total current asset to achieve this target at (2020)? (Suppose the other things are fixed)
- The manager put a plan to reduce the selling period in the (2020) by (16.7%) from the previous year (2019). Calculate the new inventory turnover.
(Suppose the other things are fixed)
Data of 2019 | |
Total Asset Turnover | 2 Times |
Net Fixed Asset | 400 (Thousand OMR) |
Total Liabilities | 400 (Thousand OMR) |
Sales | 2000 (Thousand OMR) |
Quick Ratio | 1.5 Times |
Accounts Receivable | 150 (Thousand OMR) |
Long-term Liabilities | 200 (Thousand OMR) |
Use the following:
CR = Total Current AssetTotal Current Liabilities = Times (Unit of Measurement)
QR = Total Current asset -inventoryTotal Current Liabilities = Times (Unit of Measurement)
Total Current Liabilities =
Inventory turnover = Sales / Inventory = Times
Selling Period = (Inventory x 360) / Sales = Days
ART = SalesAccount Receivable = Times
DSO = account receivable x 360sales = Days
Total Asset Turnover = Sales / Total Asset
= Times
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