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The following data (in millions) were adapted from recent financial statements of Johnson & Johnson. 1. Compute the accounts receivable

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The following data (in millions) were adapted from recent financial statements of Johnson & Johnson.

The following data (in millions) were adapted from recent financial

1. Compute the accounts receivable turnover for Years 1 and 2. Round to one decimal place.
2. Compute the number of days€™ sales in receivables for Years 1 and 2. Round to one decimal place.
3. Compute the inventory turnover for Years 1 and 2. Round to one decimal place.
4. Compute the number of days€™ sales in inventory for Years 1 and 2. Round to one decimal place.
5. Comment on Johnson & Johnson€™s management of receivables and inventory based upon the results in parts (1), (2), (3), and(4).

Financial Statements
Financial statements are the standardized formats to present the financial information related to a business or an organization for its users. Financial statements contain the historical information as well as current period’s financial...
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Net sales Cost of merchandise sold Average accounts receivable Average inventory Year 2 $65,030 20,350 12,568 5,832 Year 1 $61,587 18,792 12,219 5,279

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1 Year 2 Year 1 Accounts receivable turnover 65 030 12 568 5 2 61 587 12 219 5 0 2 Number o…View the full answer


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Survey of Accounting

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Question Posted: March 11, 2014 10:18:19
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Related Video

Inventory turnover is a key metric that helps businesses evaluate the efficiency of their operations. A high turnover ratio is generally considered positive, indicating that the company is effectively selling its inventory and making efficient use of its resources. On the other hand, a low turnover ratio may indicate issues such as overstocking or slow sales and may require further examination to identify and address the underlying causes. Businesses use this ratio to make decisions about inventory levels, production schedules, and pricing strategies. It also helps businesses to identify areas where they may need to make improvements, such as reducing lead times for production or optimizing sales and marketing efforts. Additionally, inventory turnover is used by investors and analysts as a key performance indicator to evaluate the financial health and growth potential of a company.

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