Nugent, Inc, has a gross profit margin of 25.49 percent on sales of $7,42,976 an
ID: 2698860 • Letter: N
Question
Nugent, Inc, has a gross profit margin of 25.49 percent on sales of $7,42,976 and total assets of $6,872,416. The company has a current ratio of 2.69 times, accounts receivable of $1,438,163 cash and marketable securities of $197,562, and current liabilities of $831,240.
What's Nugent's level of current assets?
How much inventory does the firm have?
what is the inventory turnover ratio?
What is Nugent's day's sales outstanding?
If management wants to set a target DSO of 30 days, what should Nugent's accounts receivable be?
Explanation / Answer
Nugent's level of current assets=current ratio*current liabilities=2.69*831,240=$ 22,36,035.60
inventory does the firm have= current assets-accounts receivable-cash and marketable securities
=$ 22,36,035.60-1,438,163 -$197,562=$ 600310.60
inventory turnover ratio=Sales / Inventory=$7,42,976/ 600310.60=1.238(approx)
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