Selected financial data for Shumway Ltd. are shown below.

Instructions
(a) Calculate for each of 2017 and 2016 the following ratios:
1. Receivables turnover
2. Collection period
3. Inventory turnover
4. Days sales in inventory
5. Operating cycle
(b) Based on the ratios calculated in part (a), what conclusion(s) can be drawn about the management of the receivables and inventory?

Transcribed Image Text:

2017 2016 2015 Net sales Cost of goods sold Accounts receivable (gross) Inventory evable (gross)4,540,000 $6,240,000 $6,420,000 4,550,000 750,000 980,000 3,950,000 650,000 840,000 850,000 1,020,000