Sales for the year totaled $600,000. The company president believes the company carries excess inventory. She would
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Sales for the year totaled $600,000. The company president believes the company carries excess inventory. She would like the inventory turnover ratio to be 8´ and would use the freed up cash to reduce current liabilities. If the company follows the president's recommendation and sales remain the same, the new quick ratio would be:
Naib Corp. has the following simplified balance sheet:
Cash.......... $ 50,000 Current liabilities ..... $125,000
Inventory ........ 150,000
Accounts receivable .... 100,000 Long-term debt .......175,000
Net fixed assets ..... 200,000Common equity ......200,000
Total ..........$500,000 Total ........... $500,000
Inventory Turnover RatioThe inventory turnover ratio is a ratio of cost of goods sold to its average inventory. It is measured in times with respect to the cost of goods sold in a year normally. Inventory Turnover Ratio FormulaWhere,...
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Related Book For
Intermediate Accounting
ISBN: 978-0324592375
17th Edition
Authors: James D. Stice, Earl K. Stice, Fred Skousen
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