During the current year, Carl Equipment Stores had net sales of $600 million, a
ID: 2389593 • Letter: D
Question
During the current year, Carl Equipment Stores had net sales of $600 million, a cost of goods sold of $500 million, average accounts receivable of $75 million, and average inventory of $50 million.Assuming a 365-day year, the number of days required for Carl Equipment to convert its average inventory into cash is:A) 73.0.
B) 36.5.
C) 304.2.
D) 24.3.
Short-term creditors are likely to view a higher-than-average inventory turnover rate as indicating that:
A) The company is able to sell its inventory quickly.
B) The company has a longer-than-average operating cycle.
C) A company is in financial difficulty.
D) The company probably has an excessive amount of inventory.
When a company sells bonds between interest dates they will pay which of the following at the first interest payment date?
A) An amount less than the stated interest rate times the principal.
B) An amount more than the stated interest rate times the principal.
C) The company may skip the first interest payment date since the appropriate time has not passed.
D) An amount equal to the stated interest rate times the principal.
Explanation / Answer
inventory conversion period=cost of goods sold/average inventory*365
50/500*365=36.5 days
A) 73.0.
B) 36.5.
C) 304.2.
D) 24.3.
Short-term creditors are likely to view a higher-than-average inventory turnover rate as indicating that:
A) The company is able to sell its inventory quickly.
B) The company has a longer-than-average operating cycle.
C) A company is in financial difficulty.
D) The company probably has an excessive amount of inventory.
When a company sells bonds between interest dates they will pay which of the following at the first interest payment date?
A) An amount less than the stated interest rate times the principal.
B) An amount more than the stated interest rate times the principal.
C) The company may skip the first interest payment date since the appropriate time has not passed.
D) An amount equal to the stated interest rate times the principal.
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