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ID: 2688940 • Letter: #
Question
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2010
2011
Cash and marketable securities
$ 50,000
$ 50,000
Accounts receivable
300,000
350,000
Inventories
350,000
500,000
Total current assets
$700,000
$900,000
Accounts payable
$200,000
$250,000
Bank loan
0
150,000
Accruals
150,000
$600,000
Total current liabilities
$350,000
$600,000
The Robinson Company from Problem 2 had net sales of $1,200,000 in 2010 and $1,300,000 in 2011.
How much of a change in the 2011 receivables occurred?
<?xml:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" /?>
2010
2011
Cash and marketable securities
$ 50,000
$ 50,000
Accounts receivable
300,000
350,000
Inventories
350,000
500,000
Total current assets
$700,000
$900,000
Accounts payable
$200,000
$250,000
Bank loan
0
150,000
Accruals
150,000
$600,000
Total current liabilities
$350,000
$600,000
Explanation / Answer
Receiveable Turnover Ratio= Sales/Receivables for 2010, rt ratio=1200000/300000=4 hence,for 2011 rt ratio would be same as 2010 i.e, 4 therefore, investment in receivable is 1300000/4=325000
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