For its most recent year a company had Sales (all on credit) of Rs. 1,000,000 and Cost
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Question:
For its most recent year a company had Sales (all on credit) of Rs. 1,000,000 and Cost of Goods Sold of Rs. 550,000. At the beginning of the year its Accounts Receivable were Rs. 95,000 and its Inventory was Rs. 150,000. At the end of the year its Accounts Receivable were Rs. 120,000 and its Inventory was Rs. 170,000. Calculate Inventory Turnover Ratio in Days and Account Receivable Turnover in Days? Explain how to assess results obtained by Inventory Turnover and Account Receivable Turnover. How can you use ratio analysis for measuring performance of a company who had just started operations?
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