Bill is concerned about the inventory and account receivables turnover ratios because of their purpose and meaning in converting the situation of the business into figures. Inventory turnover ratio is to measures how efficient a business is at managing their inventory and generating sales from it, the formula for the ratio is (Cost of Good Sold)/(Average Inventory). From the statement, Linda Berhad initially had 5.1 turnover ratio where 1/5.1 ×365 days=71.57 days, this indicates that Bob initially only used approximate 72 days to clear off his entire inventory. Meanwhile, Bill had noticed that the ratio had decreased to 2.7 where it took about 136 days (1/2.7 ×365 days=135.19 days) for Linda Berhad to clear off their entire inventory. This means Linda Berhad are having a tough time to sell off their goods which is true as Bob said their computers were unable to sell during the holiday season. An increase in days for a company to completely clear off their stock is not a good sign as the quality of the inventories might go down or outdated. In the case of Linda Berhad, their products which is computers, if the inventory take a longer time to clear off, then their products might be unable to sell in the future as technology products like computer keep evolving from time to …show more content…
From the statement, Linda Berhad ratio had drop from 11 to 7.1 which also indicates that they initially only took about 34 days (1/11 ×365 days=33.18 days) to collect receive cash from debtors for each credit sales. However, the days for receive cash had been increase due to its decrease of ratio to 7.1 where it took about 52 days (1/7.1 ×365 days=51.41 days) for them to collect cash from debtors for their current
Cash turnover ratio = sales/ average cash, and the following is the ratio from different company
Accounts Receivable Turnover: This ratio decreased, but had a substantial jump to be at 6.35 in 2013.
We began with a look at your efficiency ratio, concentrating on your receivables turn over for the past year. This reflects the time between your sale and actual collection. If a company 's Turnover
1.The Quick Ratio decrease, due to an audit adjustment to Net Accounts Receivable. This ratio indicates a decrease in the ratio of assets to liabilities.
5. Inventory Turnover: This ratio is rendered by taking the cost of goods sold, for a time period, divided by average inventory. This shows how many times a firms inventory is sold and replaced during the period of time that it is calculated for.
Accounts receivable turnover measures how many times a company can turn its accounts receivables into cash. This ratio shows how well the company is collecting credit sales from its customers. The equation for accounts receivable turnover
Peggy Bell is a 40-year-old white Caucasian female who presents to the FNP clinic in the company of her elderly mother. Patient is emaciated, has fingers that are severely nicotine stained, smells strongly of alcohol, answers questions in monologues with no eye contact, and appears to be nodding off between coughing episodes. The mother reports that the patient:
The Inventory Turnover Period has improved for ASOS, in 2014 it only took the company 120 days to sell inventory where in 2013 it was taking them 141 days. This proves that the amount of time inventory is held for before it is sold has decreased. However, the Trade Receivables Settlement Period has increased by 1 day. Meaning, it may be taking longer for receivables to be settling their debt with ASOS. Until the debt is settled it is seen as a loss for the company. The Trade Payables Settlement Period has reduced by 3 days to 20 days and this ratio measures just how long the company will take to pay its debts (to its suppliers). Therefore, this means that the Working Capital Cycle has also been reduced by 17, which is an improvement as the
19. The financial statements of the Bolton Manufacturing Company reports net sales of $500,000 and accounts receivable of $50,000 and $30,000 at the beginning of the year and end of year, respectively. What is the receivables turnover ratio for Bolton?
The account receivable turnover ratio (A6) measures how efficiently a company uses it assets. In this case Pinnacle has a declining turnover ratio that indicates that Pinnacle should re-evaluate its credit policies to ensure timely receivable collection. Looking at the
According to the balance sheet Laura & Bob increased accounts receivable by 100,600 by the end of year three. Now this increase could indicate that the company may be short in collecting, and might be struggling to find the cash to pay the bills. So, it would be important for them to go back, and potentially indicate why the company may be short in cash. After indicating why there is an increase in accounts receivable they will be able to take steps from there to stabilize the company.
11. Accounts receivable turnover and days sales in accounts receivable for the last three years:
Receivables Turnover: This shows the degree of realization in accounts receivables. Company N has a lower turnover rate, a lower rate implies that receivables are being held longer and the less likely they are to be collected. Also there is an opportunity cost of tying up funds in receivables for a long period of time. Company M is 29 times higher than company N.
Inventory turnover in days is an assistant figure of inventory turnover. The shorter of the days, the faster of the inventory turning to cash, and the better use of short-term capital. This figure of the firm was very high in 2001 and began to fell down from 2002,then lower than industry in 2004 and 2005.This indicates the management of the firm became better.
Kolodny, N, J, 2004, The beginner’s guide to eating disorders recovery, Gurze Books, Carlsbad, CA