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?
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
Section: Chapter Questions
Problem 1PS
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Question
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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