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The 2018 income statement of Anderson Medical Supply Company reported net sales of $10 million, cost...


The 2018 income statement of Anderson Medical Supply Company reported net sales of $10 million, cost of goods sold of $5.6 million, and net income of $840,000. The following table shows the companys comparative balance sheets for 2018 and 2017: 0182017 $460 540 Assets Cash Accounts receivable Inventory Property, plant, and equipment (net) 860 1,300 1,100 3,2002,920 $5,820 $5,140 Total assets Liabilities and shareholders equity Current liabilities Bonds payable Paid-in capital Retained earnings $1,120 990 1,600 1,600 1,800 1,800 1 300 750 Total liabilities and shareholders equity $5,820$5,140 Required: 1. Calculate Andersons turnover ratios for 2018. (Consider 365 days a year. Round your answers to 2 decimal places.) Inventory turnover ratio Receivables tunover ratio Average collection period Asset turnover ratio times times days times
The 2018 income statement of Anderson Medical Supply Company reported net sales of $10 million, cost of goods sold of $5.6 million, and net income of $840,000. The following table shows the company's comparative balance sheets for 2018 and 2017: 0182017 $460 540 Assets Cash Accounts receivable Inventory Property, plant, and equipment (net) 860 1,300 1,100 3,2002,920 $5,820 $5,140 Total assets Liabilities and shareholders equity Current liabilities Bonds payable Paid-in capital Retained earnings $1,120 990 1,600 1,600 1,800 1,800 1 300 750 Total liabilities and shareholders' equity $5,820$5,140 Required: 1. Calculate Anderson's turnover ratios for 2018. (Consider 365 days a year. Round your answers to 2 decimal places.) Inventory turnover ratio Receivables tunover ratio Average collection period Asset turnover ratio times times days times
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Answer #1

Inventory turnover ratio = COGS / Average inventory

= 5600 / {(1300+1100)/2} = 4.67 times

Receivables turnover ratio = net Credit sale / Average account receivables

= 10000 / {860+580) / 2} = 13.89 times

Average collection period = 365 / Receivables turnover ratio

= 365 / 13.89 = 26.28 days

Asset turnover ratio = Net Sales / Average fixed assets

= 10000 / {(3200+2920) / 2} = 3.27 days

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