Question

ULUNUH Business Course Preparing The Cash Return to course Question 10 Not yet answered Marked out of 5.00 P Flag question Computing Activity Ratios Selected balance sheet and income statement information follows for R.A. Corporation. R.A. Corporation $ millions April 2. 2020 March 28, 2019 Income statement information: Sales $20.967 $22,353 Cost of goods sold 9,654 9,726 Balance sheet information: Accounts receivable, gross 2,313 2,718 Inventory 3.375 3.126 Accounts payable 468 630 Required Compute the following ratios for its fiscal year ended April 2, 2020. • Round your answers to two decimal places (for example, enter 20.46 for 20.4555558). a. Accounts receivable turnover b. Average days to collect receivables Inventory turnover d. Average days in inventory e. Accounts payable turnover f. Average days payable outstanding g Cash conversion cycle B Save Answers

Answer 1

1) Accounts Receivable turnover = Sales

---------------

Average accounts Receivable

= $ 20967

--------------

( $ 2718+$ 2313)/2

= $ 20967

--------------- = 8.34

$ 2515.50

2) Average days to collect Receivables = Days in Period * Average accounts Receivables

-----------------------------------------------------------------

Net Sales

= 365*2515.50 918157.50

-------------------- = -------------- = 43.79 days

20967 20967

3) Inventory Turnover Ratio = Sales / Average Inventory

= 20967 20967

---------- = ----------- = 6.45

( 3375+3126 )/2 3250.50

4) Average days in Inventory = (Cost of Average Inventory/ Cost of Good Sold )*365

=( 3250.50/9654)*365 = 122.90 days

5) Accounts Payable Turnover Ration = Total Purchases / Average Accounts Payable

= 9903/(468+630) =9903/1098 = 9

Purchase = Cost of goods sold + Ending inventory - Starting Inventory

= 9654+3375-3126

= 9903

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6) Average days payable outstanding = ( Days in Period * Average accounts Payable)/ Cost of Goods Sold

= (365*1098)/9654 = 41.51 days

7) Cash Conversion Cycle = Days of Inventory Outstanding+ Days of sales outstanding+Days of Payable Outstanding

= ( Inventory / Cost of Good Sold ) *365+( Accounts Receivable /Sales)*365+ (Accounts Payable / Cost of Goods Sold)*365

=(3375/9654)*365+(2313/20967)*365+(468/9654)*365

=127.60+40.26+17.69 = 185.55