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Question
A high accounts receivable turnover ratio indicates
a. customers are making payments quickly.
b. a large portion of the company's sales are on credit.
c. many customers are not paying their receivables.
d. the company's sales have increased.
Answer
This answer is hidden. It contains 35 characters.
Related questions
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Which of the following analysis are the two major techniques of common-size analysis?
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The ___________________ is calculated by dividing the market price per share by earnings per share.
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Q:
u200b
Kooper Co.
Income Statement
For the Year Ended December 31, Year 1
Revenues: u200b u200b
Net sales u200b $383,000
Less: Cost of goods sold u200b 121,700
Gross margin u200b $261,300
Less Operating expenses: u200b u200b
Selling expenses $41,500 u200b
Administrative expenses 56,500 u200b
Interest expense 12,000 u200b
Total expenses u200b 100,000
Net income u200b $151,300
Kooper Co.
Balance Sheet
December 31,Year 1
Assets
Current assets: u200b u200b u200b
Cash u200b $53,000 u200b
Accounts receivable u200b 64,300 u200b
Marketable securities u200b 10,500 u200b
Inventory u200b 93,250 u200b
Total current assets u200b u200b $221,050
Property, plant, and equipment: u200b u200b u200b
Store equipment $325,000 u200b u200b
Less Accumulated depreciation 162,100 $162,900 u200b
Office equipment $149,750 u200b u200b
Less Accumulated depreciation 72,750 77,000 u200b
Total property, plant, and equipment u200b u200b 239,900
Total assets u200b u200b $460,950
Liabilities
Current liabilities: u200b u200b u200b
Accounts payable u200b $97,200 u200b
Salaries payable u200b 28,700 u200b
Total current liabilities u200b u200b $125,900
Long-term liabilities: u200b u200b u200b
Note payable (due Year 1) u200b u200b 154,000
Total liabilities u200b u200b $279,900
Stockholders Equity
Total stockholders equity u200b u200b 181,050
Total liabilities and equity u200b u200b $460,950u200b
There were 30,000 shares of common stock outstanding throughout Year 1. Dividends on common stock amounted to $21,000 and dividends on preferred stock amounted to $30,000. The market value of a share of common stock was $36 at the end of Year 1. The income tax rate is 40%. The accounts receivable and inventory accounts had beginning balances of $58,500 and $101,400 respectively. Total assets at the beginning of the year were $430,500.
Required: Calculate the following ratios:
A. return on sales
B. return on total assets
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Comparative Balance Sheets
Year 2 Year 1
Cash $128,000 $201,000
Accounts receivable 472,000 438,000
Inventories 797,000 673,000
Prepaid expenses 81,000 92,000
Plant and equipment (net) 2,655,000 2,428,000
Total assets $4,133,000 $3,832,000
Accounts payable $198,000 $280,600
Long-term bonds payable 1,000,000 1,000,000
Preferred stock, 10%, $100 par 450,000 450,000
Common stock, no par 1,800,000 1,800,000
Retained earnings 685,000 301,400
Total liabilities and stockholders equity $4,133,000 $3,832,000
Income Statement
December 31, Year 2
Sales, net $5,400,000
Less cost of goods sold 3,240,000
Gross margin 2,160,000
Less operating expenses 1,010,000
Net operating income 1,150,000
Interest expense 80,000
Net income before taxes 1,070,000
Less income taxes 321,000
Net income $749,000
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Total assets $650,000 $821,000 $800,000
Net credit sales 800,000 650,000 720,000
Accounts receivable 85,000 79,000 74,000
A. Calculate eMonstore.com's accounts receivable turnover ratio for years 2 and 3.
B. Calculate the number of days the average balance of receivables is outstanding before being converted into cash (turnover in days) for years 2 and 3.
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Net income 65,000 25,000 16,000
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Net Sales $800,000 $700,000 $550,000 $500,000
Cost of Goods Sold 560,000 500,000 420,000 400,000
Gross Margin $240,000 $200,000 $130,000 $100,000
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Bogart Company has 40,000 shares of common stock outstanding. The book value per share of this stock was $60 and the market value per share was $75 at the end of the year. Net income for the year was $400,000. Interest on long-term debt was $40,000. Dividends paid to common stockholders were $3 per share. The tax rate was 30%. The company's price-earnings ratio at the end of the year was
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