Accounts Receivable Turnover
The following financial data is from Hi-Tech Instruments' financial statements (thousands of dollars, except earnings per share.)
|Cost of goods sold||125,000|
|Earnings per share||4.15|
(Thousands of Dollars)
|Dec. 31, 2016||Dec. 31, 2015|
|Accounts receivable (net)||45,000||40,000|
|Total current assets||102,800||101,700|
|Plant assets (net)||52,600||50,500|
|Liabilities and Stockholders' Equity|
|Total current liabilities||45,000||45,700|
|9% Bonds payable||39,000||39,000|
|Common stock, $25 par value (2,000,000 shares)||50,000||50,000|
|Total stockholders' equity||87,000||81,300|
|Total liabilities and stockholders' equity||171,000||166,000|
|Industry Average Ratios for Competitors|
|Accounts receivable turnover||5.9 times|
|Inventory turnover||3.5 times|
|Gross profit percentage||42.8 percent|
|Return on sales||4.5 percent|
|Return on assets||7.6 percent|
Calculate the company's accounts receivable turnover for 2016.
Round answer to one decimal place.
Compare the result to the industry average.
Hi-Tech Instruments' ratio is higher than the industry average.
Hi-Tech Instruments' ratio is lower than the industry average.
Accounts Receivables Turnover ratio: is the ratio between the total sales and average Accounts Receivables
Accounts Receivables turnover ratio = Sales / Average Accounts Receivables
Sales = $209,000
Average Accounts Receivables = (45,000+ 40,000)/2 = 85,000/2 = $42,500
Accounts Receivables Turnover Ratio = $209,000/ $ 42,500 = 4.9 Times (answer )
Get Answers For Free
Most questions answered within 1 hours.