Question
The following balances and turnover ratios for individual operating assets and operating liabilities have been calculated using end-of-year figures based on Kamloops Inc.s reformulated 2021
The following balances and turnover ratios for individual operating assets and operating liabilities have been calculated using end-of-year figures based on Kamloops Inc.s reformulated 2021 Balance Sheet:
Balance Turnover
Operating cash $ 20,000 200.0000
Accounts receivable $ 250,000 16.0000
Inventory $ 500,000 8.0000
Property, plant & equipment $ 900,000 4.4444
Accounts payable $ 275,000 14.5454
Provisions $ 175,000 22.8571
Net Operating Assets $1,220,000
Assuming that Kamloops operating profit margin after tax remains the same, what will happen to its RNOA if the Accounts Receivable turnover decreases to 15, the inventory turnover increases to 10, and the Accounts Payable turnover increases to 18?
1. | Kamloops RNOA will increase | |
2. | Kamloops RNOA will decrease | |
3. | It is not possible to determine how the changes will affect Kamloops RNOA based on the information provided | |
4. | Kamloops RNOA will remain the same |
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