Question

The following information shows an industries' current financial standing: Annual Sales $1,200,000.00 Current Liabilities $ 375,000.00...

The following information shows an industries' current financial standing:

Annual Sales $1,200,000.00

Current Liabilities $ 375,000.00

Days Sales Outstanding 20.00

Inventory Turnover 2.40

Current Ratio 0.60

  1. How much cash does industry have?
  2. Calculate the Inventory.
  3. Calculate the accounts receivable of industry.
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Answer #1

Current ratio = 0.60

Current liabilities = 375,000

Current ratio = current assets / curretn liablities

current assets = .60 * 375,000 = 225,000

Days sales outstanding = (Accounts receivables / Total sales) * number of days

Accounts receivables = (20 * 1,200,000) / 365

Accounts receivables = 65753.4

Inventory turnover = Sales / inventory

2.4 = 1,200,000 / inventory

inventory = 500,000

Current assets = Cash + Accounts receivables + inventory

225,000 = cash + 65753.4 + 500,000

cash = 340,753.4

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