Based on the comparative income statement and balance sheet of Cowan Kitchen Cou

Question

Based on the comparative income statement and balance sheet of Cowan Kitchen Counters, Inc., that follow: Cowan Kitchen Counters, Inc. Comparative Income Statement For Years Ended December 31, 20-2 and 20-1 20-2 20-1 Net Sales (all on account) $2,592,300 1,883,000 $709,300 319,500 24,200 177,900 $187,700 $2,167,800 1,628,400 539,400 218,400 24,200 108,400 $188,400 Cost of goods sold Gross profit Operating expenses Other expense (interest) Income tax expense Net income ) Cowan Kitchen Counters, Inc. Comparative Balance Sheet December 31, 20-2 and 20-1 20-2 20-1 Cash Government notes Accounts receivable (net) $260,900 $242,000 250,100 905,800 250,100 798,800

Explanation / Answer

Accounts receivable turnover in days = 365 * Average receivables / Sales

= 365 * ((905800 + 798800) / 2) / 2592300 = 120 days

Inventory turnover days = 365 * Average inventory / Cost of goods sold

= 365 * ((988700 + 912800)/2) / 1883000 = 184 days

Asset turnover = Sales / Total assets

= 2592300 / 3012000 = 0.86

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