3.6 please sorry for the quality Calcolate Lgay\'sretum on Problem 3.s n opratin

Question

3.6 please sorry for the quality

Calcolate Lgay'sretum on Problem 3.s n oprating prtgf5 pecentbd n sales ofsT llion and total assets or s5 milhion last yea What was Mesas otal asset tumover tio Durning the coming year, the company president st of attining a t asset mover of 3 How much must fi saleiother things being the for the goal to be achieved what was Mesa's operating income return on investment last year? Assuming the ns opersting protit margin remains the sam, what will the operatingincom retm on investment he next year if the total asset tunover goal is achieved e Problem 3.6 Phoonis Aviation Company had gross proit magin of 40 percent and sales of s20 million last year 72 percent of the fimssles are on credit and the remainder are cash sales. Phoenis's current assets equal S2 million, its current liabilities equal $500,000, and it has S200,000 in cash plus markctable securities Assume a 360-day year a If Phoenis's accounts receivable is $1.200,000, what is its average collection period? b If Phoenix decreases its average collection period to 20 days, what will be its new level of accounts receivable Phoenis's inventory tumover ratio is cight times. What is the level of Phoenixs inventories Page 17

Explanation / Answer

In Millions Sales $20 Cost of Goods sold $16 Balance Gross Profit $8 $20*40% Credit Sales - 72% of $ 20 14.4 Cash Sales - 28% of $ 20 5.6 Current assets $2 Current Liabilities $0.50 Cash plus marketable securities $0.20 a Average collection period = 360/Accounts Receivable turnover 360/12 30 days Accounts Receivable = Credit Sales/Accounts Receivable 14.40/1.2 12 times b Average collection period = 360/Accounts Receivable turnover 20 = 360/Accounts Receivable 18 18 Accounts Receivable Turnover Accounts Receivable Turnover = 14.40/Accounts Receivable 18 = 14.40/Accounts Receivable Accounts Receivable = $ 0.80 million c Inventory Turnover ratio = COGS/Inventory 8 = 16/inventory Inventory = 16/8 Inventory = $ 2 million

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