Accounts receivable turnover, inventory turnover, and net margin Selected data from Warren Company follow. Required Compute the
Question:
Accounts receivable turnover, inventory turnover, and net margin Selected data from Warren Company follow.
Required
Compute the following:
a. The accounts receivable turnover for 2011.
b. The inventory turnover for 2011.
c. The net margin for 2010.
Balance Sheet As of December 31 2010 2011 $376,000 Accounts receivable $400,000 (20,000) $380,000 $480,000 Allowance for doubtful accounts (16,000) $360,000 Net accounts receivable Inventories, lower of cost or market $440,000 Income Statement for the Years Ended December 31 2011 2010 Net credit sales $2,000,000 $1,760,000 320,000 Net cash sales 400,000 2,400,000 Net sales 2,080,000 Cost of goods sold Selling, general, and administrative expenses Other expenses Total operating expenses 1,600,000 240,000 40,000 1,440,000 216,000 24,000 $1,880,000 $1,680,000
Step by Step Answer:
a Net credit salesAverage net receivables ...View the full answer
Fundamental Managerial Accounting Concepts
ISBN: 978-0078110894
6th Edition
Authors: Edmonds, Tsay, olds
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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