2) Excerpts from Sydner Corporation\'s most recent balance sheet appear below: Y

Question

2) Excerpts from Sydner Corporation's most recent balance sheet appear below:

Year 2 and 1

current assets

cash $140 $160

AR $210 $230

inventory $240 $200

Prepaid Expenses $10 $10

Total current Assets $600 $600

Total current Liabilites $360 $330

Sales on account in Year 2 amounted to $1,390 and the cost of goods sold was $900.

The inventory turnover for Year 2 is closest to:

a)3.75

b)1.20

c)4.09

d)0.83

a)3.89

b)1.04

c)3.97

d)4.05

4) All other things the same, when a company increases its inventories in anticipation of later higher sales, the accounts receivable turnover ratio for the current period increases.

True

False

8) When computing the return on equity, retained earnings should be excluded from the average total stockholders' equity.

True

False

Please show work, no calculators allowed.

Explanation / Answer

1 Inventory Turnover = Cost of Goods Sold/ Average Inventory Average Inventory = 240+200/2 = $ 220 Inventory Turnover = 900/220 Inventory Turnover is 4.09 4 FALSE 8 FALSE

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