a. Based on these data, calculate the following for 2010 and 2009: 1. Days sales in receivables
Question:
1. Days’ sales in receivables (use trade receivables)
2. Accounts receivable turnover (use gross trade receivables at year- end)
3. Days’ sales in inventory
4. Inventory turnover (use year- end inventory)
5. Working capital
6. Current ratio
7. Acid- test ratio
b. Comment on each ratio individually
c. Why are portions of long- term debt included in short- term borrowings?
d. Prepare a vertical common- size analysis for the balance sheets using 2010 and 2009. (Use total assets as the base.)
e. Comment on the vertical common- size analysis
Accounts Receivable
Accounts 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...
Step by Step Answer:
a 1 Days sales in receivables use trade receivables Gross Trade Receivables Net Sales365 2010 2009 1137000000 77000000 1238000000 98000000 7187000000365 7606000000365 6165 days 6411 days Assumption ma...View the full answer
Financial Reporting and Analysis Using Financial Accounting Information
ISBN: 978-1133188797
13th 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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