Use the income statement and balance sheet to compute rate of inventory turnover

Question

Use the income statement and balance sheet to compute rate of inventory turnover and days inventory outstanding. Begin by listing formula and then amounts to calculate inventory turnover.

Select formula and then calculate days’ inventory outstanding. Use 365 day year.

Use income statement and balance sheet to compute days’ sales in average receivables.

List the formula and then enter the amounts to calculate days’ sales in outstanding DSO. Use a 365 day years. Enter amounts in millions. Round interim calculations.

Use the 2012 income statement and balance sheet to compute accounts payable turnover and payables outstanding. Enter amounts in millions.

Now list the formula and then enter the amounts to calculate days payable: outstanding DPO. Use a 365 day year. Round your final answer to the nearest whole number.

d. Use the 2012 income statement and balance sheet to compute the length of cash conversion cycle in days.

Explanation / Answer

Answer: Inventory Turnover ratio=Net COGS/Average Inventory

=[$2559/(82+102)/2]

=27.82 times

Days inventory outstanding=365 days/Inventory Turnover ratio

=365 days/27.82

=13.12 days

days’ sales in average receivables:

Accounts receivable Turnover ratio=Net Credit sales/Average Accounts receivable

=[$9500/(250+240)/2]

=38.78 times

Days sales in average receivable=365 days/Accounts receivable turnover ratio

=365 days/38.78

=9.41 days

Accounts payable turnover =Net COGS/Average Accounts Payable

=$2559/(

Days in Payable outstanding=365 days/Accounts Payable turnover

CCC=DIO+DSO=DPO

=13.12+9.41-

Full Balance sheet is not given.

Related Questions

Navigate

• Browse (All)
• Browse U
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.