The total sales (all credit) of a firm are 6,40,000. It has a gross profit margin...

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The total sales (all credit) of a firm are 6,40,000. It has a gross profit margin of 15 per cent and a current ratio of 2.5. The firm's current liabilities are 96,000; inventories 48,000 and cash 16,000. (a) Determine the average inventory to be carried by the firm, if an inventory turnover of 5 times is expected? (Assume a 360 day year). (b) Determine the average collection period if the opening balance of debtors is intended to be of ₹ 80,000? (Assume a 360 day year). The total sales (all credit) of a firm are 6,40,000. It has a gross profit margin of 15 per cent and a current ratio of 2.5. The firm's current liabilities are 96,000; inventories 48,000 and cash 16,000. (a) Determine the average inventory to be carried by the firm, if an inventory turnover of 5 times is expected? (Assume a 360 day year). (b) Determine the average collection period if the opening balance of debtors is intended to be of ₹ 80,000? (Assume a 360 day year).

Answer rating: 100% (QA)

Answer Certainly lets proceed with the calculations a Average Inventory Given Total Sales 640000 SAR Gross Profit Margin 15 Inventory Turnover Ratio 5 ... View the full answer