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Accounts receivable turnover %3D

Accounts receivable turnover %3D

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Solve for the efficiency of the given company.
Efficiency refers to a company's ability to be efficient in its operations. Specifically, it refers to the speed with which various current accounts are converted into sales, and ultimately, cash. • You may refer back to the sari-sari store example to illustrate the meaning of efficiency (in that example, the credit period is the target speed with which the store goals to collect their receivables). Sales Accounts receivable turnover = Accounts Receivable 365 Average collection period = Accounts Receivable Turnover Cost of goods sold Inventory turnover =D Inventory 365 Average age of inventory: %3D Inventory Turnover
Transcribed Image Text:Efficiency refers to a company's ability to be efficient in its operations. Specifically, it refers to the speed with which various current accounts are converted into sales, and ultimately, cash. • You may refer back to the sari-sari store example to illustrate the meaning of efficiency (in that example, the credit period is the target speed with which the store goals to collect their receivables). Sales Accounts receivable turnover = Accounts Receivable 365 Average collection period = Accounts Receivable Turnover Cost of goods sold Inventory turnover =D Inventory 365 Average age of inventory: %3D Inventory Turnover
Practice 1. Solve for the Efficiency of the Given Company Cample Company Statement of Financial Position as of December 31, 2014 ASSETS LIABILITIES AND STOCKHOLDERS' EQUITY Cash P 120,000.00 Accounts Payable P 70,000.00 Marketable Securities P 35,000.00 Short-term notes P 55,000.00 Accounts Receivable P 45,000.00 Current Liabilities P 125,000.00 Inventories P 130,000.00 Long-term debt P 2,700,000.00 Current Assets P 330,000.00 Total Liabilities P 2,825,000.00 Equipment P 2,970,000.00 Common stock P 500,000.00 Buildings P 1,600,000.00 Retained earnings P 1,575,000.00 Fixed Assets P 4,570,000.00 Stockholders' equity P 2,075,000.00 Total Assets P 4,900,000.00 Total liabilities and equity P 4,900,000.00 Sample Company Statement of Financial Performance for the Year Ended December 31, 2014 Sales Revenue P 2,000,000.00 Cost of Sales/Service P (1,300,000.00) Gross Margin P 700,000.00 Operating Expenes P (199,000.00) Operating Profit P 501,000.00 Other Income P 5,000.00 Other Expenses P (2,800.00) Net Income before Tax P 503,200.00 P (150,960.00) Income Tax P 352,240.00 Net Income after Tax
Transcribed Image Text:Practice 1. Solve for the Efficiency of the Given Company Cample Company Statement of Financial Position as of December 31, 2014 ASSETS LIABILITIES AND STOCKHOLDERS' EQUITY Cash P 120,000.00 Accounts Payable P 70,000.00 Marketable Securities P 35,000.00 Short-term notes P 55,000.00 Accounts Receivable P 45,000.00 Current Liabilities P 125,000.00 Inventories P 130,000.00 Long-term debt P 2,700,000.00 Current Assets P 330,000.00 Total Liabilities P 2,825,000.00 Equipment P 2,970,000.00 Common stock P 500,000.00 Buildings P 1,600,000.00 Retained earnings P 1,575,000.00 Fixed Assets P 4,570,000.00 Stockholders' equity P 2,075,000.00 Total Assets P 4,900,000.00 Total liabilities and equity P 4,900,000.00 Sample Company Statement of Financial Performance for the Year Ended December 31, 2014 Sales Revenue P 2,000,000.00 Cost of Sales/Service P (1,300,000.00) Gross Margin P 700,000.00 Operating Expenes P (199,000.00) Operating Profit P 501,000.00 Other Income P 5,000.00 Other Expenses P (2,800.00) Net Income before Tax P 503,200.00 P (150,960.00) Income Tax P 352,240.00 Net Income after Tax
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