Homework Answers
Ans :
(1) Days sales outstanding = Number of days in a year / Receivable turnover ratio
60.833 = 365 days / Receivable turnover ratio
Receivable turnover ratio = 365 / 60.833
Receivable turnover ratio = 6.
(2) Days Sales in inventory = Number of days in a year / Inventory turnover ratio
= 365 days / 12
Days Sales in inventory = 30.4167 days
(3) Operating cycle = Inventory period + Account receivable period
= Days Sales in inventory + Days sales outstanding
= 30.5167 days + 60.833 days
Operating cycle = 91.2497 days
(4) Net operating cycle = Days Sales in inventory + Days sales outstanding - Days purchase outstanding
= 30.5167 days + 60.833 days - 45 days
Net operating cycle = 46.2497 days.
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Current Year
Previous Year
Accounts receivable
$
3,727,000
$
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Less: Allowance for doubtful accounts
185,000
148,000
Net accounts receivable
$
3,542,000
$
4,379,000
Net sales (assume all on credit)
$
35,397,000
Required:
1. Determine the receivables turnover ratio and
average days sales in receivables for the current year.
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calculations. Enter your answers in thousands not in
dollars.)...
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