for the year net credit sales were 8258 million dollars cost

for the year net credit sales were 8258 million dollars, cost of goods sold was 5328 million dollars, and net cash provided by operating activities was 1251 million dollars. compute the current ratio, accounts receivable turnover, average collection period, Inventory turnover ,and days in inventory at the end of the current year

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Solution

All Amount in Millions

1) Current Ratio :-

= Current Assets / Current Liabilities

= $4220 / $2060

= 2.05 Times

2). Accounts Receivable Turnover :-

= Net Credit Sales / Avrg. Accounts Receivable

= $8258 / (($1910+$1610)/2)

= $8258 / $1760

= 4.69 times

3) Avg. Collection Period :-

= 365 days / Accounts Receivable Turnover

= 365 / 4.69

= 77.83 Days

4) Inventory Turnover :-

= Cost of Goods Sold / Average Inventory

= $5328 / (($810 + $810)/2)

= $5328 / $810

= 6.58 times

5). Days in Inventory :-

= 365 Days / Inventory Turnover

= 365 / 6.58

= 55.5 days