question archive 1) Here are several ratios calculated from Midas Company's financial statements: Days in Receivables = 55 Days in Payables = 39 Days in Inventory = 38 How many days of working capital financing does Midas need to obtain from other sources? a
1) Here are several ratios calculated from Midas Company's financial statements: Days in Receivables = 55 Days in Payables = 39 Days in Inventory = 38 How many days of working capital financing does Midas need to obtain from other sources? a
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1) Here are several ratios calculated from Midas Company's financial statements:
Days in Receivables = 55
Days in Payables = 39
Days in Inventory = 38
How many days of working capital financing does Midas need to obtain from other sources?
| a. |
59 days |
|
| b. |
56 days |
|
| c. |
54 days |
|
| d. |
61 days |
2) Asset turnover represents
A. The ability to manage the level of investment in assets for a particular level of assets.
B. The number of days, on average, it takes management to turnover assets.
C. The ability to generate sales from a investment in assets.
D. The ability of the firm to generate income from operations for a particular level of sales.
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Answer:
1.
| Working capital days from other sources = Days In Account Receivables + Days in inventoy - days in account payable | ||||
| =55+38-39 | ||||
| =54 days | ||||
| Correct Answer =c. 54 days |
||||
2.
Answer (C) The ability to generate sales from a investment in assets.
Explanation
Asset turnover ratio represents how much a company has generated revenues for every asset in the company. An asset turnover of 1.5 means for every dollar of asset company has generated 1.5 of revenue.
Formula for Asset turnover is Net sales/ Average Total Assets
