Chat with AI
Fundamentals of Financial Accounting 4th Edition by Fred Phillips,Robert Libby,Patricia Libby
Edition 4ISBN: 978-0078025372Fundamentals of Financial Accounting 4th Edition by Fred Phillips,Robert Libby,Patricia Libby
Edition 4ISBN: 978-0078025372 Exercise 10
Computing and Interpreting Selected Liquidity Ratios
Double West Suppliers (DWS) reported sales for the year of $300,000, all on credit. The average gross profit percentage was 40 percent on sales. Account balances follow:
Required:
1. Compute the turnover ratios for accounts receivable and inventory (round to one decimal place).
2. By dividing 365 by your ratios from requirement 1, calculate the average days to collect receivables and the average days to sell inventory (round to one decimal place).
3. Explain what each of these ratios and measures mean for DWS.
Double West Suppliers (DWS) reported sales for the year of $300,000, all on credit. The average gross profit percentage was 40 percent on sales. Account balances follow:
Required:
1. Compute the turnover ratios for accounts receivable and inventory (round to one decimal place).
2. By dividing 365 by your ratios from requirement 1, calculate the average days to collect receivables and the average days to sell inventory (round to one decimal place).
3. Explain what each of these ratios and measures mean for DWS.
Explanation
Verified
Verified
1)
Prepare inventory turnover and accou...
Fundamentals of Financial Accounting 4th Edition by Fred Phillips,Robert Libby,Patricia Libby
Why don’t you like this exercise?
Other Minimum 8 character and maximum 255 character
Character 255
