1. Blue Air Inc., has net sales of $723,000 and accounts receivables of $165,000. What are the firm's accounts receivables turnover?   2. JP Vineyards has sales of $853,000, a gross profit margin of 0.326, and inventory of $171,000. What is the company's inventory turnover ratio?

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
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1. Blue Air Inc., has net sales of $723,000 and accounts receivables of $165,000. What are the firm's accounts receivables turnover?

 

2. JP Vineyards has sales of $853,000, a gross profit margin of 0.326, and inventory of $171,000. What is the company's inventory turnover ratio? 

Expert Solution
Step 1: Introduction and Formula

Accounts receivable turnover measures how much times are the net sales of the firm in comparison of its accounts receivable.

So, accounts receivable turnover = Net sales / Accounts receivable


Inventory turnover ratio measures the ratio of company’s cost of goods sold to its inventory level.

So, inventory turnover ratio = Cost of goods sold / Inventory

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