Jim Short\'s Company makes clothing for schools. Sales in 2013 were $4,820,000.

Question

Jim Short's Company makes clothing for schools. Sales in 2013 were $4,820,000. Assets were as follows: Cash($163,000), Accounts receivables($889,000) Inventory($411,000) Net equipment($520,000) Total assets ($1,983,000):

a. Compute the following:Accounts receivable turnover, Inventory turnover, fixed asset turnover, and Total asset turnover.

b. In 2014, sales increased to $5,740,000 and the assets for that year were as follows;Cash ($163,000), Acounts receivables ($924,000), Inventory ($1,063,000), Net equipment ($520,000), Total assets ($2,670,000).

Compute the four ratios.

C. is there a improvement or a decline in total asset turnover, and based on the other ratios , indicate why this devlopment has taken place.

Explanation / Answer

there is decline in assets turnover ratios in comparison to other ratios

Accounts receivable turnover = net credit sale/avereage account receivalbe 4820000/889000 5740000/924000 5.42 6.21 Inventory turnover = sales/average inventory 4820000/411000 5740000/1063000 11.73 5.40 fixed asset turnover = net revenue/ average fixed assets 4820000/1983000 5740000/2670000 2.43 2.15 Total asset turnover = sales/total asstets 4820000/193000 5740000/2670000 2.43 2.15

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