The financial statements of Flathead Lake Manufacturing Company are shown below Income

Question

The financial statements of Flathead Lake Manufacturing Company are shown below.

Income Statement 2017
Sales	$	9,300,000
Cost of Goods Sold		5,750,000
Depreciation Expense		550,000
Gross Profit	$	3,000,000
Selling and Administrative Expenses		2,200,000
EBIT	$	800,000
Interest Expense		200,000
Income before Tax	$	600,000
Taxes		375,000
Net Income	$	225,000

Flathead Lake Manufacturing Comparative Balance Sheets
	2017		2016
Cash	$	50,000		$	40,000
Accounts Receivable		570,000			600,000
Inventory		530,000			460,000
Total Current Assets	$	1,150,000		$	1,100,000
Fixed Assets		2,050,000			1,400,000
Total Assets	$	3,200,000		$	2,500,000
Accounts Payable	$	320,000		$	300,000
Bank Loans		480,000			400,000
Total Current Liabilities	$	800,000		$	700,000
Long-term Bonds		1,500,000			1,000,000
Total Liabilities	$	2,300,000		$	1,700,000
Common Stock (200,000 shares)		200,000			200,000
Retainded Earnings		700,000			600,000
Total Equity	$	900,000		$	800,000
Total Liabilities and Equity	$	3,200,000		$	2,500,000

Note: The common shares are trading in the stock market for $15 per share.

Refer to the financial statements of Flathead Lake Manufacturing Company. The industry average ACP is 32 days. How is Flathead doing in its collections relative to the industry? (Please keep in mind that when a ratio involves both income statement and balance sheet numbers, the balance sheet numbers for the beginning and end of the year must be averaged.)

A) Flathead's receivables are outstanding about 9 fewer days than the industry average.

B) Flathead's receivables are outstanding about 15 fewer days than the industry average.

C) Flathead's receivables are outstanding about 12 more days than the industry average.

D) Flathead's receivables are outstanding about 6 more days than the industry average.

Answer

This answer is hidden. It contains 104 characters.

Q&A Hero

Question

Answer

Subjects

Question

Answer

Related questions

Subjects