a. Based on these data, calculate the following for 2008 and 2007: 1. Days' sales in receivables
Question:
a. Based on these data, calculate the following for 2008 and 2007:
1. Days' sales in receivables
2. Accounts receivable turnover (gross receivables at year-end)
3. Days' sales in inventory
4. Inventory turnover (use inventory at year-end)
5. Working capital
6. Current ratio
7. Acid-test ratio
b. Comment on each ratio individually
c. Comment on the apparent total liquidity.
Accounts ReceivableAccounts receivables are debts owed to your company, usually from sales on credit. Accounts receivable is business asset, the sum of the money owed to you by customers who haven’t paid.The standard procedure in business-to-business sales is that...
CONSOLIDATED STATEMENT OF INCOME 3M COMPANY AND SUBSIDIARIES Years ended December 31 (Millions, except per share amounts) Net sales Operating expenses 2008 2007 2006 Cost of sales 13,379 5,245 1,404 23 12,735 5,015 1,368 49) 18,269 6,193 11,713 5,066 1,522 (1,074) 17,227 5.696 Selling, general, and administrati ve expenses Research, development, and related expenses (Gainloss on sale of business Total Operating income Interest expense and income Interest expense 215 210 122 Interest income 51) Total Income before income taxes and minority interest Provision for income taxes Minority interest 110 5,108 1,588 60 S 3.460 699.2 4.95 707.2 4.89 78 6,115 1,964 5,625 1.723 51 S 3851 747.5 Net income Weighted average common shares outstanding Earnings per share basic Weighted average common shares outstanding Eamings per share diluted Cash dividends paid per common share S 4,096 718.3 5.70 732.0 5.60 S 192 basic diluted 761.0 5.06 S 1.84
Step by Step Answer:
a 1 Days Sales in Receivables In millions Gross Receivables Net Sales365 2008 2007 3195 85 3362 75 2...View the full answer
Financial Reporting and Analysis Using Financial Accounting Information
ISBN: 978-1439080603
12th Edition
Authors: Charles H Gibson
Related Video
Inventory turnover is a key metric that helps businesses evaluate the efficiency of their operations. A high turnover ratio is generally considered positive, indicating that the company is effectively selling its inventory and making efficient use of its resources. On the other hand, a low turnover ratio may indicate issues such as overstocking or slow sales and may require further examination to identify and address the underlying causes. Businesses use this ratio to make decisions about inventory levels, production schedules, and pricing strategies. It also helps businesses to identify areas where they may need to make improvements, such as reducing lead times for production or optimizing sales and marketing efforts. Additionally, inventory turnover is used by investors and analysts as a key performance indicator to evaluate the financial health and growth potential of a company.
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