($ in 9005) 2018 2017 Assets Cash Accounts receivable Inventory Property, plant,

Question

($ in 9005) 2018 2017 Assets Cash Accounts receivable Inventory Property, plant, and equipment (net) $ 380 460 540 900 780 1,100 2,800 2,520 5,060 4,420 Total assets Liabilities and shareholders' equity Current liabilities Bonds payable Paid-in capital Retained earnings 1,040 910 1,400 1,400 1,400 1,400 1,220 71e $5,060 4,420 Total liabilities and shareholders' equity Required: 1. Calculate Anderson's turnover ratios for 2018. (Consider 365 days a year. Round your an Inventory turnover ratio Receivables turnover ratio Average collection period Asset turnover ratio times times days times

Explanation / Answer

Inventory Turnover Ratio:

Average Inventory = ($1,100 + $900) / 2
Average Inventory = $1,000

Inventory Turnover Ratio = Cost of Goods Sold / Average Inventory
Inventory Turnover Ratio = $5,200 / $1,000
Inventory Turnover Ratio = 5.20 times

Receivables Turnover Ratio:

Average Accounts Receivables = ($780 + $540) / 2
Average Accounts Receivables = $660

Receivables Turnover Ratio = Net Sales / Average Accounts Receivables
Receivables Turnover Ratio = $9,000 / $660
Receivables Turnover Ratio = 13.64 times

Average Collection Period:

Average Collection Period = 365 / Receivable Turnover Ratio
Average Collection Period = 365 / 13.64
Average Collection Period = 26.76 days

Asset Turnover Ratio:

Average Assets = ($5,060 + $4,420) / 2
Average Assets = $4,740

Asset Turnover Ratio = Net Sales / Average Assets
Asset Turnover Ratio = $4,740 / $9,000
Asset Turnover Ratio = 0.53 times

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