5. The financial information below presents selected information from the financ
ID: 2596601 • Letter: 5
Question
5. The financial information below presents selected information from the financial statements of Pelican Company. Sales revenue during the current year was $13,640,300 and cost of goods sold was $8,906,695. All of Pelican's sales are made on account and are due within 30 days. 605,780 4,580,000 3,803,000 923,3601,232,440 8,625,030 8,435,100 11,103,020 10,983,000 7,305,3007,281,000 8,452,9008,246,700 S 555,330 Cash and cash equivalents Accounts receivable Inventory Total current assets Total assets Total current liabilities Total liabilities Calculate the following a. Current ratios as of the end of the current and prior year. (Round your answers to 2 decimal places.) Current Year Prior Year Current Ratio b. Calculate the receivables turnover ratio for the current year. (Round your answer to 2 decimal places.) eceivables Turnover c. Calculate the days to collect for the current year (Round your intermediate calculations and final answers to 2 decimal place.) ays to CollectExplanation / Answer
Part 1 - Current Ratio
Current Ratio = Current Assets/Current Liabilities
Part 2 - Inventory Turnover Ratio for Current Year
Inventory Turnover Ratio = Sales/Average Accounts Receivable
Average Accounts receivable = ($4580000 + $3803000)/2 = $4191500
Part 3 - Calculate days to collect in current Year
Assume = Number of days in a year = 365 days
Number of days to collect Receivables =
365/Account receivable ratio
Part 4 - Inventory Turnover ratio
Inventory Turnover = Cost of goods sold/Average Inventory
Average Inventory = ($923360 + $1232440)/2 = 1077900
Part 5 - Days to sell Inventory for current year
= 365/8.26 = 44.19 Days
Particulars Prior Year Current Year Current Assets $8435100 $8625030 Current Liabilities $7281000 $7305300 Current Ratio 1.16 1.18Related Questions
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