Jim Short’s Company makes clothing for schools. Sales in 2013 were $4,820,000. A
ID: 2756665 • Letter: J
Question
Jim Short’s Company makes clothing for schools. Sales in 2013 were $4,820,000. Assets were as follows:
Cash……………………………………….
$ 163,000
Accounts receivable……………………….
889,000
Inventory…………………………………..
411,000
Net plant and equipment…………………..
520,000
Total assets……………………………
$1,983,000
a. Compute the following:
1. Accounts receivable turnover
2. Inventory turnover
3. Fixed asset turnover
4. Total asset turnover
Cash……………………………………….
$ 163,000
Accounts receivable……………………….
889,000
Inventory…………………………………..
411,000
Net plant and equipment…………………..
520,000
Total assets……………………………
$1,983,000
Explanation / Answer
1) Accounts receivable turnover = Sales /Accounts receivable
= 4,820,000 / 889000
= 5.42
2)Inventory turnover = COGS /Inventory
= COGS IS MIssing and so this ratio cannot be computed
3)Fixed asset turnover = net sales / fixed asset
= 4,820,000 / 520,000
= 9.27
4)Total asset tunrover = sales / Total asset
= 4,820,000 / 1,983,000
= 2.43
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