. Are dollars invested in inventory increasing? Jose Sanchez owns and operates Westem Gear, a small merchandiser...

. Are dollars invested in inventory increasing?

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Jose Sanchez owns and operates Westem Gear, a small merchandiser in outdoor recreational equipment. You are hired to review the three most recent years of operations for Westem Gear. Your financial statement analysis reveals the following results: 2006 2005 2004 Sales index-number trend.... Selling expenses to net sales. Sales to plant assets... 137.0 125.0 100.0 9.8% 13.7% 15.3% 3.5 to 1 3.3 to 1 3.0 to 1 Current ratio. 2.6 to 1 2.4 to 1 2.1 to 1 Acid-test ratio. 0.8 to 1 1.1 to 1 1.2 to 1 Merchandise inventory turnover..... 7.5 times 8.7 times 9.9 times Accounts receivable turnover. 6.7 times 7.4 times 82 times 2.6 times Totala sset tumover.. Retum on total assets. Retum on owners equity. Net profit margin.... 2.6 times 3.0 times 8.8% 9.4% 10.1% 9.75% 11.50% 12.25% 3.3% 3.5% 3.7% Required: Use these data to answer each of the following questions with explanations: a. Is it becoming easier for the company to meet its current debts on time and to take advantage of cash discounts? b. Is the company collecting its accounts receivable more rapidly over time? c. Is the company's investment in accounts receivable decreasing? d. Are dollars invested in inventory increasing? e. Is the company's investment in plant a ssets increasing? f. Is the owner's investment becoming more profitable? g. Is the company using its assets efficiently? h. Did the dollaramount of selling expenses decrease during the three-year period? Jose Sanchez owns and operates Westem Gear, a small merchandiser in outdoor recreational equipment. You are hired to review the three most recent years of operations for Westem Gear. Your financial statement analysis reveals the following results: 2006 2005 2004 Sales index-number trend.... Selling expenses to net sales. Sales to plant assets... 137.0 125.0 100.0 9.8% 13.7% 15.3% 3.5 to 1 3.3 to 1 3.0 to 1 Current ratio. 2.6 to 1 2.4 to 1 2.1 to 1 Acid-test ratio. 0.8 to 1 1.1 to 1 1.2 to 1 Merchandise inventory turnover..... 7.5 times 8.7 times 9.9 times Accounts receivable turnover. 6.7 times 7.4 times 82 times 2.6 times Totala sset tumover.. Retum on total assets. Retum on owners equity. Net profit margin.... 2.6 times 3.0 times 8.8% 9.4% 10.1% 9.75% 11.50% 12.25% 3.3% 3.5% 3.7% Required: Use these data to answer each of the following questions with explanations: a. Is it becoming easier for the company to meet its current debts on time and to take advantage of cash discounts? b. Is the company collecting its accounts receivable more rapidly over time? c. Is the company's investment in accounts receivable decreasing? d. Are dollars invested in inventory increasing? e. Is the company's investment in plant a ssets increasing? f. Is the owner's investment becoming more profitable? g. Is the company using its assets efficiently? h. Did the dollaramount of selling expenses decrease during the three-year period?

Answer rating: 100% (QA)

a Answer Yes as the current ratio is increasing every year so it is becoming easier for thecompany to meet its current debts The ratio increased by 83 ... View the full answer