Question

Jim Short’s Company makes clothing for schools. Sales in 20X1 were $4,140,000. Assets were as follows:...

Jim Short’s Company makes clothing for schools. Sales in 20X1 were $4,140,000. Assets were as follows:

  

Cash $ 160,000
Accounts receivable 812,000
Inventory 413,000
Net plant and equipment 571,000
Total assets $ 1,956,000

  

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

Accounts receivable turnover

Inventory turnover

Fixed Assets turnover

Total Assets turnover

b. In 20X2, sales increased to $5,200,000 and the assets for that year were as follows:

  

Cash $ 160,000
Accounts receivable 915,000
Inventory 990,000
Net plant and equipment 571,000
Total assets $ 2,636,000

    

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

Accounts Receivable turnover

Inventory turnover

Fixed Assets turnover

Total Assets turnover

c. Is there an improvement or a decline in the total asset turnover?

  

Decline
Improvement

Homework Answers

Answer #1

a)

Accounts receivable turnover [Sales/ Accounts receivable] [4,140,000/812,000] 5.10
Inventory turnover [Sales/ Inventory] [4140000/413000] 10.02
Fixed Assets turnover [Sales/ Fixed assets] [4140000/571000] 7.25
Total Assets turnover [Sales/ Total assets] [4140000/1956000] 2.12

b)

Accounts receivable turnover [Sales/ Accounts receivable] [5200000/915000] 5.68
Inventory turnover [Sales/ Inventory] [5200000/990000] 5.25
Fixed Assets turnover [Sales/ Fixed assets] [5200000/990000] 10.06
Total Assets turnover [Sales/ Total assets] [5200000/2636000] 1.97

c) Decline.

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