Question

Richards & James is a multinational corporation that manufactures and markets many household products. Last year,...

Richards & James is a multinational corporation that manufactures and markets many household products. Last year, sales for the company were $75,000 (all amounts in millions). The annual report did not disclose the amount of credit sales, so we will assume that 80 percent of sales were on credit. The average gross profit on sales was 44 percent. Additional account balances were:


Ending Beginning
Accounts receivable (net) $ 6,700 $ 6,500
Inventory 6,827 6,301


Required:

1. Compute Richards & James receivable turnover ratio and its inventory turnover ratio.

2. How many days does it take for the Company to collect its accounts receivable and sell its inventory.

Business   Accounting   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

1.

Accounts Receiveble Turnover ratio = Net credit sales / Average accounts Receiveble
Accounts Receiveble Turnover ratio = ($75,000*80%) / (($6,700+$6,500)/2)
Accounts Receiveble Turnover ratio = 9.09
Inventory turn over ratio = Cost of goods sold / Average inventory
Inventory turn over ratio = ($75,000*66%) / (($6,827+$6,301)/2)
Inventory turn over ratio = 7.54113

2.

Days to collect = 365/Receivables turn over ratio
Days to collect = 365/9.09
Days to collect = 40.15
Number of days sales in inventory = Ending inventory / Cost of goods sold * 365
Number of days sales in inventory = $6,827 / ($75,000*66%)*365
Number of days sales in inventory = 50.34 Days

You can reach me over comment box if you have any doubts. Please rate this answer

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Richards & James is a multinational corporation that manufactures and markets many household products. Last year,...
Richards & James is a multinational corporation that manufactures and markets many household products. Last year, sales for the company were $69,000 (all amounts in millions). The annual report did not disclose the amount of credit sales, so we will assume that 70 percent of sales were on credit. The average gross profit on sales was 48 percent. Additional account balances were: Ending Beginning Accounts receivable (net) $ 7,900 $ 6,400 Inventory 6,832 6,295 Required: 1. Compute Richards & James'...
1 Last year a company reported sales of $ 10 million and an inventory turnover ratio...
1 Last year a company reported sales of $ 10 million and an inventory turnover ratio of 5. It is now adopting a new inventory system. If the new system is able to reduce the firm's inventory level and increase the firm's inventory turnover ratio to 8 while maintaining the same level of sales, how much cash will be freed up? 2 A company has days sales outstanding of 18 days. It averages $ 6,500 in credit sales every day....
Sales for the year for Victor Company were $1,200,000, 70 percent of which were on credit....
Sales for the year for Victor Company were $1,200,000, 70 percent of which were on credit. The average gross profit rate was 45 percent on sales. Account balances follow: Beginning Ending Accounts receivable (net) $ 62,000 $ 76,000 Inventory 77,000 41,000 Required: 1. Compute the turnover for the accounts receivable and inventory. (Round your answers to 1 decimal place.) 2. Compute the average age of receivables, and the average days' supply of inventory. (Use 365 days in a year. Round...
During the current accounting period, revenue from credit sales is $791,000. The accounts receivable balance is...
During the current accounting period, revenue from credit sales is $791,000. The accounts receivable balance is $52,680 at the beginning of the period and $64,200 at the end of the period. Which of the following statements is correct? The receivables turnover ratio is 27.1. On average, it takes 13.5 days to collect payment from credit customers. The receivables turnover ratio is 13.5. On average, the company sells its inventory every 27.07 days.
Calculating the Average Inventory, the Inventory Turnover Ratio, and the Inventory Turnover in Days Last year,...
Calculating the Average Inventory, the Inventory Turnover Ratio, and the Inventory Turnover in Days Last year, Nikkola Company had net sales of $2,299,500,000 and cost of goods sold of $1,755,000,000. Nikkola had the following balances: January 1 December 31 Accounts receivable $142,650,000 $172,350,000 Inventory     54,374,200     62,625,800 Required: Note: Round answers to one decimal place. Assume 365 days per year. 1. Calculate the average inventory. $ 2. Calculate the inventory turnover ratio. times 3. Calculate the inventory turnover in days. days...
Exercise 7-20 Presented below is information for Kingbird Company. 1. Beginning-of-the-year Accounts Receivable balance was $16,600....
Exercise 7-20 Presented below is information for Kingbird Company. 1. Beginning-of-the-year Accounts Receivable balance was $16,600. 2. Net sales (all on account) for the year were $102,400. Kingbird does not offer cash discounts. 3. Collections on accounts receivable during the year were $90,000. Prepare (summary) journal entries to record the items noted above. (If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when the amount...
James Corporation started 2019 with a $22,000 balance in accounts receivable and an $800 balance in...
James Corporation started 2019 with a $22,000 balance in accounts receivable and an $800 balance in the allowance for doubtful accounts. The company had credit sales (sales on account) of $44,000, collections on accounts receivable of $47,000, and wrote off uncollectible accounts of $500 during 2019. The company uses the allowance method and estimates that 4% of its outstanding accounts receivable balance will be uncollectible. 20. The balance in the accounts receivable account at the end of 2019 would be...
Cintas Corporation is the largest uniform supplier in North America. Selected information from its annual report...
Cintas Corporation is the largest uniform supplier in North America. Selected information from its annual report follows. For the 2013 fiscal year, the company reported sales revenue of $5.5 billion and Cost of Goods Sold of $3.7 billion. Fiscal Year 2013 2012 Balance Sheet (amounts in millions) Cash $ 480 $ 400 Accounts Receivable, net 740 690 Inventories 300 310 Prepaid Rent 705 600 Accounts Payable 180 160 Salaries and Wages Payable 460 460 Income Tax Payable 104 22 Notes...
A condensed balance sheet for Bradford Corporation prepared at the end of the year appears as...
A condensed balance sheet for Bradford Corporation prepared at the end of the year appears as follows. Assets Liabilities & Stockholders' Equity Cash $ 110,000 Notes payable (due in 6 months) $ 46,000 Accounts receivable 140,000 Accounts payable 94,000 Inventory 270,000 Long-term liabilities 324,000 Prepaid expenses 60,000 Capital stock, $5 par 300,000 Plant & equipment (net) 570,000 Retained earnings 476,000 Other assets 90,000 Total $ 1,240,000 Total $ 1,240,000 During the year, the company earned a gross profit of $1,116,000...
Cintas designs, manufactures, and implements corporate identity uniform programs that it rents or sells to customers...
Cintas designs, manufactures, and implements corporate identity uniform programs that it rents or sells to customers throughout the United States and Canada. The company’s stock is traded on the NASDAQ and has provided investors with significant returns over the past few years. Selected information from the company’s balance sheet follows. For 2012, the company reported sales revenue of $3,707,600 and cost of goods sold of $1,517,815. CINTAS Balance Sheet (in thousands) 2012 2011 Cash $ 35,378 $ 38,933 Marketable securities...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT