Ribaudo Corporation has provided the following financial data from its balance s
ID: 2498716 • Letter: R
Question
Ribaudo Corporation has provided the following financial data from its balance sheet and income statement: home / study / questions and answers / business / accounting / ribaudo corporation has provided the following ... Question Ribaudo Corporation has provided the following financial data from its balance sheet and income statement: Year 2 Year 1
Cash $74,000 $130,000
Accounts receivable $255,000 $240,000
Inventory $173,000 $180,000
Total current assets $564,000 $610,000
Total assets $1,350,000 $1,330,000
Accounts payable $170,000 $160,000
Total liabilities $633,000 $620,000
Total stockholders' equity $717,000 $710,000
Sales (all on account) $1,290,000
Cost of goods sold $700,000
The company's operating cycle for Year 2 is closest to:
The company's accounts receivable turnover for Year 2 is closest to:
a. 1.05
b. 5.06
c. 5.21
d. .94
Explanation / Answer
Answer: Calculation of the company's operating cycle for Year 2 is closest to:
Operating cycle= Days' Sales of Inventory + Days Sales Outstanding
=92 days+70.05 days
=162.05 days
The company's accounts receivable turnover for Year 2 is closest to 5.21
c. 5.21
Inventory turnover ratio =(Cogs/Average inventory)
=($700,000/[($180,000+$173000)/2]
=$700000/176500=3.97 times
Days' Sales of Inventory=365 days/Inventory turnover ratio
=365 days/3.97=92 days
Accounts receivable turnover ratio=Credit sale/Average accounts receivable
=$1,290,000/[($240,000+$255000)/2]
=$1290000/247500
=5.21 times
Days Sales Outstanding=365 days/Accounts receivable turnover ratio
=365 days/5.21
=70.05 days
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.