Question 1
Calculation of Accounts Receivables.
Given information
Total Sales= 800 million
Cash sales= 70 million
Credit sales= Total sales-cash sales (800-70)= 730 million
Average Collection days = 10 days
Accounts Receivables= (Credit sales/number of days in year)*Average collection days
Accounts Receivables= (730 million /365)*10days
Accounts Receivables= 20 million
Question 2.
Calculation of the Return on Investment
Return on Investment= Net Income / Cost of Investment (Total Assets)
Net income = Total turnover* net profit margin%
Net income = 800*8%
Net income = 64 million
Total Assets= Total sales(turnover)/total asset turnover ration
Total Assets = 800/1.5
Total Assets= 533.33 millions
Return on Investment =64 /533.33
Return on Investment = 12%
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