Question

?(Evaluatingliquidity?)

The Tabor Sales Company had a gross profit margin? (grossprofitsdivided by÷?sales)of 30.3 percent and sales of ?$9.1 million last year.? Seventy-five percent of the? firm's sales are on credit and the remainder are cash sales.? Tabor's current assets equal ?$2.7 ?million, its current liabilities equal ?$310,000 and it has 105,000 in cash plus marketable securities.

a. If? Tabor's accounts receivable are ?$562,500 what is its average collection? period?

b. If Tabor reduces its average collection period to 24 ?days, what will be its new level of accounts? receivable?

c. ?Tabor's inventory turnover ratio is 9.3 times. What is the level of? Tabor's inventories?

Answer 1