Question

Jim Short’s Company makes clothing for schools. Sales in 20X1 were $4,370,000. Assets were as follows:...

Jim Short’s Company makes clothing for schools. Sales in 20X1 were $4,370,000. Assets were as follows:

  

Cash $ 154,000
Accounts receivable 843,000
Inventory 471,000
Net plant and equipment 540,000
Total assets $ 2,008,000

  a. Compute the following: (Round your answers to 2 decimal places.)

Turnover Ratios
1. Accounts receivable turnover times
2. Inventory turnover times
3. Fixed asset turnover times
4. Total asset turnover times

  

b. In 20X2, sales increased to $5,800,000 and the assets for that year were as follows:

Cash $ 154,000
Accounts receivable 907,000
Inventory 1,037,000
Net plant and equipment 540,000
Total assets $ 2,638,000

    

Compute the following: (Round your answers to 2 decimal places.)

  

Turnover Ratios
1. Accounts receivable turnover times
2. Inventory turnover times
3. Fixed asset turnover times
4. Total asset turnover times

Homework Answers

Answer #1
Short's Company a..20X1 b.20X2
Accounts receivable turnover
Sales/Accounts Receivables
4370000/843000= 5800000/907000=
times 5.18 6.39
Inventory turnover
Sales/Inventory
4370000/471000= 5800000/1037000=
times 9.28 5.59
Fixed asset turnover
Sales/Fixed assets
4370000/540000= 5800000/540000=
times 8.09 10.74
Total asset turnover
Sales/Total assets
4370000/2008000= 5800000/2638000=
times 2.18 2.20
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