Sales for the year totaled $600,000. The company president believes the company carries excess inventory. She would

Question:

Sales for the year totaled $600,000. The company president believes the company carries excess inventory. She would like the inventory turnover ratio to be 8´ and would use the freed up cash to reduce current liabilities. If the company follows the president's recommendation and sales remain the same, the new quick ratio would be:

Naib Corp. has the following simplified balance sheet:

Cash.......... $ 50,000 Current liabilities ..... $125,000

Inventory ........ 150,000

Accounts receivable .... 100,000 Long-term debt .......175,000

Net fixed assets ..... 200,000Common equity ......200,000

Total ..........$500,000 Total ........... $500,000

Inventory Turnover Ratio
Inventory Turnover RatioThe inventory turnover ratio is a ratio of cost of goods sold to its average inventory. It is measured in times with respect to the cost of goods sold in a year normally. Inventory Turnover Ratio FormulaWhere,...