You are a credit analyst of a growing commercial bank and have recently received loan applications from two companies of relatively similar size. Show below are selected financial data for these two applicants at the end of the current year: RED CO BLUE CO. Net credit sales P700,000.00 P650,000.00 Cost of goods sold P500,000.00 P490,000.00 Cash P60,000.00 P20,000.00 Accounts receivable (net) P77,000.00 P60,000.00 Inventory P94,000.00 P180,000.00 Current liabilities P110,000.00 P105,000.00 Assume that the year-end balances for accounts receivable and for inventory approximate the average balances of these items throughout the year. A. Compute the following on BLUE

FINANCIAL ACCOUNTING
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ISBN:9781259964947
Author:Libby
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Chapter1: Financial Statements And Business Decisions
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You are a credit analyst of a growing commercial bank and have recently received
loan applications from
two companies of relatively
similar size.
Show below are selected financial data for these two applicants at the end of the
current year:
RED CO
BLUE CO.
Net credit sales
P700,000.00
P650,000.00
Cost of goods sold
P500,000.00
P490,000.00
Cash
P60,000.00
P20,000.00
Accounts receivable (net)
P77,000.00
P60,000.00
Inventory
P94,000.00
P180,000.00
Current liabilities
P110,p00.00
P105,000.00
Assume that the year-end balances for accounts receivable and for inventory
approximate the average
balances of these items
throughout the year.
A. Compute the following on BLUE
1. Inventory turnover
2. Days sales in inventory
3. Operating cycle
Transcribed Image Text:You are a credit analyst of a growing commercial bank and have recently received loan applications from two companies of relatively similar size. Show below are selected financial data for these two applicants at the end of the current year: RED CO BLUE CO. Net credit sales P700,000.00 P650,000.00 Cost of goods sold P500,000.00 P490,000.00 Cash P60,000.00 P20,000.00 Accounts receivable (net) P77,000.00 P60,000.00 Inventory P94,000.00 P180,000.00 Current liabilities P110,p00.00 P105,000.00 Assume that the year-end balances for accounts receivable and for inventory approximate the average balances of these items throughout the year. A. Compute the following on BLUE 1. Inventory turnover 2. Days sales in inventory 3. Operating cycle
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