Question

Data Table Achieve's Companies Income Statement Years Ended May 31, 2016 and 2015 2016 2015 Net Sales Cost of Goods Sold Interest Expense All Other Expenses 49,200,000 $ 20,800,000 600,000 4,300,000 41,600,000 28,600,000 280,000 7.800,000 Net Income $ 23,500,000 $ 4,920,000 Print Done مطعم مراد امد وممم

Answer 1

Requirement 1: Calculate inventory turnover, days' sales in inventory, and gross profit percentage for A company for 2016 as shown below: Cost of Goods sold Inventory Turnover = Average Inventory $20,800,000 (S7,300,000+S6.800.000)-2 $20.800.000 $7,050,000 = 2.95Times Hence, the inventory turnover is 2.95Times Day's sales in inventory as shown below: 365 Days' sales in inventory = Inventory turnover Ratio 365 2.95 =123.73 days Calculate Gross Profit percentage as shown below: Gross Profit x100 Gross Profit Percentage = Sales Net Sales - Cost of Goods Sold Net Sales Revenue $49,200,000-$20,800.000 100 $49.200.000 = 57.72%

Requirement 2: Calculate days 'sales in Receivable during 2016 as shown below: Net Credit Sales Accounts Receivable Turnover = Average NetAccounts Receivbales $49.200,000 ($7,500,000+$5,700,000)-2 S49,200,000 $6,600,000 = 7.455 times 365 Days' sales in Receivable =- Accounts Receivable Turnover Ratio 365 7.455 = 48.960 = 49 Days Hence, days 'sales in receivable is 49 Days. Requirement 3: From the above calculations, it can be said that A company sells its average merchandise inventory 2.95 times a year and it holds inventory 123.73 days. Further, A company takes approximately 49 days to collect its Accounts Receivables and company collects its Average Receivables 7.45 times a year.