10 Accounts receivable turnover, inventory turnover, and net margin LO 9-2, 9-4
ID: 2420311 • Letter: 1
Question
10 Accounts receivable turnover, inventory turnover, and net margin LO 9-2, 9-4
Selected data from Komar Company follow.
ACCOUNTS RECEIVABLE TURNOVER ( ) TIMES
Compute the inventory turnover for 2014. (Round your answer to 2 decimal places.)
B. INVENTORY TURNOVER TIMES ( )
C. Compute the net margin for 2013. (Round your answer to 2 decimal places. (i.e., .2345 should be entered as 23.45).) NET MARGIN ( ) %
8 Working capital and current ratio LO 9-2
On June 30, 2014, Freeman Company’s total current assets were $501,000 and its total current liabilities were $270,000. On July 1, 2014, Freeman issued a short-term note to a bank for $40,200 cash.
Compute Freeman’s working capital before and after issuing the note.
WORKING CAPITAL
BEFORE THE TRANSACTION ( )
AFTER THE TRANSACTION ( )
B. Compute Freeman’s current ratio before and after issuing the note. (Round your answers to 2 decimal places.)
CURRENT RATIO
BEFORE THE TRANSACTION ( )
AFTER THE TRANSACTION ( )
9 Ratio analysis LO 9-2, 9-3
Compute the following. (Round "Ratio and Percentage" answers to 1 decimal place.)
WORKING CAPITAL ___________
CURRENT RATIO ___________
DEBT TO ASSET RATIO ___________ %
DEBT TO EQUITY RATIO ___________
10 Accounts receivable turnover, inventory turnover, and net margin LO 9-2, 9-4
Selected data from Komar Company follow.
ACCOUNTS RECEIVABLE TURNOVER ( ) TIMES
B. Compute the inventory turnover for 2014. (Round your answer to 2 decimal places.)
INVENTORY TURNOVER ( ) TIMES
C. Compute the net margin for 2013. (Round your answer to 2 decimal places. (i.e., .2345 should be entered as 23.45).)
NET MARGIN ( ) %
Balance SheetAs of December 31 2014 2013 Accounts receivable $ 401,000 $ 374,000 Allowance for doubtful accounts (20,050 ) (14,960 ) Net accounts receivable $ 380,950 $ 359,040 Inventories, lower of cost or market $ 484,000 $ 447,000
Explanation / Answer
Answer:10
a. Accounts Receivable Turnover ratio=Net Credit sales/Average Accounts Receivable
=2,008,000/[(359,040+380,950)/2]
=2,008,000/369995
=5.43 times
B. Inventory Turnover ratio=Net Cost of good sold/Average Inventory
=1,592,000/[( 447,000+484000)/2]
=1592000/465500
=3.42 times
C. Net margin for 2013
=(Net income/Net sales)*100
=(390900/2,067,000)*100
=18.91%
Answer:8
a. Working capital=Current Asset-Current Liability
Before the transactions =501000-270000
=231000
After the transactions=(501000+40200)-270000
=271200
B. Current ratio=Current Asset/Current Liability
Before the transactions =501000/270000
=1.855 times
After the transactions=(501000+40200)-270000
=2.004 times
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