You are provided with the following info about a company for two years (in milli

Question

You are provided with the following info about a company for two years (in millions):

                                                2015                                  2016

sales                                    23,000                                32,000

Cost of Sales                       11,960                               17,600

Acct Recievables                4,830                                    10,560

Calculate:

A. Days sales in receivable index

B. Gross margain index

C. Sales growth index

Any thoughts about this company?

Explanation / Answer

2015 2014 Sales 23000 32000 Cost of Sales 11960 17600 Gross margin 11040 14400 Gross Margin ratio 48 45 Gross Margin Index=Gross Margin ratio of previous year/Gross margin ratio of current year 0.94 Sales Growth Index=Sales CURRENTyear/Sales of previous year 0.72 Day Sales in receivable index=(net recivable/Sales of current year/net receivable/sales of prevoius year 4830/23000 10560/32000 0.64 The sales have been decreased in 2015 but the expenses have also been decreased more than normal 2) The cash sales are more than credit sales as compare to last year

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