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The Kretovich Company had a quick ratio of 1.1, a current ratio of 2.5, a days'...

The Kretovich Company had a quick ratio of 1.1, a current ratio of 2.5, a days' sales outstanding of 36.5 days (based on a 365-day year), total current assets of $512,500, and cash and marketable securities of $110,000. What were Kretovich's annual sales? Do not round intermediate calculations. Round your answer to the nearest dollar.

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Answer #1

current ratio=current assets/current liabilities

current liabilities=(512500/2.5)=$205000

quick ratio=(Current assets-inventory)/current liabilities

(1.1*205000)=512500-inventory

inventory=512500-225500

=$287000

Total current assets=inventory+cash and marketable securities+accounts receivable

accounts receivable=(512500-110,000-287000)=$115500

Days sales outstanding=(accounts receivable/Annual sales)*365 days

36.5=(115500/Annual sales)*365

Annual sales=(115500*365)/36.5

=$1,155,000.

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