Selected financial data for Shumway Ltd. are shown below. 

Instructions 

a. Calculate the following ratios for each of 2024 and 2023: 

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:

Net sales Cost of goods sold Accounts receivable (gross) Inventory 2024 2023 $6,420,000 $6,240,000 4,540,000 4,550,000 850,000 1,020,000 750,000 980,000 2022 $5,430,000 3,950,000 650,000 840,000