You are a Financial Manager for Dexter Manufacturing. Your sales were $1,000,000 in 2010, and $1,000,000 again in 2011. Your accounting department came to you recently and stated that the cash balance is much lower at the end of 2011 than it was in 2010. You calculate your Accounts Receivable and Inventory Turnover for 2011 and noticed that both of these ratios have DROPPED from 2010 to 2011! Describe in a couple paragraphs what has happened to Accounts Receivable and Inventory. Does this help explain why cash is running low in your opinion? What could you suggest to your management team to help improve these 2 ratios and to help increase cash?

Answer rating: 100% (QA)

Step 1 Accounts Receivable and Inventory Turnover ratio The accounts receivable turnover ratio is ca... View the full answer