question archive The 2021 income statement of Anderson Medical Supply Company reported net sales of $12 million, cost of goods sold of $6
The 2021 income statement of Anderson Medical Supply Company reported net sales of $12 million, cost of goods sold of $6
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The 2021 income statement of Anderson Medical Supply Company reported net sales of $12 million, cost of goods sold of $6.2 million, and net income of $870,000. The following table shows the company's comparative balance sheets for 2021 and 2020: (5 in 2021 2020 Assets $ 580 1,600 BBCO $6,960 60 540 1,010 2920 55,830 McCounts receivable Inventory Property, plant, and equipment (net) Total assets Liabilities and shareholders' equity Current liabilities Bonds payable Common stock Retained earnings Total liabilities and shareholders' equity $1.240 1,900 2,400 $1,110 1,900 2,400 rences 56,960 $5,830
Required:
Calculate Anderson's turnover ratios for 2021 (Use 365 days a year. Round your answers to 2 decimal places.)
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Answer:
| Inventory turnover ratio = cost of goods sold/average inventory | ||||||
| average inventory = 1600+1010/2 = 1305 | ||||||
| inventory turnover ratio = 6200/1305 = 4.75 | ||||||
| receivable turnover ratio = net sale/average account receivable | ||||||
| average account receivable = 980+640/2 =810 | ||||||
| receivable turnover ratio = 12000/810 = 14.81 | ||||||
| average collection period = 365/receivable turnover ratio | ||||||
| average collection period = 365/14.81 = 24.64 | ||||||
| assets turnover ratio= net sale/average total assets | ||||||
| average assets = 6960+5830/2 =6395 | ||||||
| assets turnover ratio = 12000/6395 = 1.88 |
