Use the AJ Cardenas 2014 income statement that follows and the balance sheet from S13-6 to compute the following:
In S13-6, Use the AJ Cardenas, Inc., balance sheet data on the shown below.
AJ Cardenas, Inc.
Balance sheets (adapted)
December 31, 2014 and 2013

AJ Cardenas, Inc.
Statement of Income (adapted)
Year Ended December 31, 2014 and 2013

a. AJ Cardenas Inc.’s rate of inventory turnover and days’ inventory outstanding for 2014.
b. Days’ sales in average receivables (days’ sales outstanding) during 2014 (round dollar amounts to one decimal place).
c. Accounts payable turnover and days’ payables outstanding for 2014. For this purpose, assume that the impact of inventories on cost of goods sold is immaterial, allowing you to use cost of goods sold rather than purchases in your computations.
d. Length of cash conversion cycle in days for 2014. Do these measures look strong or weak? Give the reason for youranswer.

  • CreatedJuly 25, 2014
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