Accounts Receivable and Inventory RatiosBell Company, whose current assets at December 31 are shown below, had net sales for the year of $956,000 and cost of goods sold of $558,900. At the beginning of the year, Bell's accounts receivable (net) were $161,000 and its inventory was $200,000.Cash$32,400Short-term investments55,000Accounts receivable (net)169,000Inventory200,000Prepaid expenses11,600Current assets$468,000 Instructions:Round turnover ratios to two decimal places.Use rounded turnover ratios to compute respective days' ratios.Round days' ratios to the nearest whole number (day). a. What is the company's accounts receivable turnover for the year?Answer b. What is the company's average collection period for the year?Answer daysc. What is the company's inventory turnover for the year?Answer d. What is the company's days' sales in inventory for the year?Answer days

Account receivable turnover ratio has been calculated by dividing net sales with average account…

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Managerial Accounting: The Cornerstone of Business Decision-Making

7th Edition

ISBN:9781337115773

Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Chapter15: Financial Statement Analysis

Section: Chapter Questions

Problem 56P: The following selected information is taken from the financial statements of Arnn Company for its...

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Accounts Receivable and Inventory Ratios
Bell Company, whose current assets at December 31 are shown below, had net sales for the year of $956,000 and cost of goods sold of $558,900. At the beginning of the year, Bell's accounts receivable (net) were $161,000 and its inventory was $200,000.

Cash	$32,400
Short-term investments	55,000
Accounts receivable (net)	169,000
Inventory	200,000
Prepaid expenses	11,600
Current assets	$468,000

Instructions:

Round turnover ratios to two decimal places.
Use rounded turnover ratios to compute respective days' ratios.
Round days' ratios to the nearest whole number (day).

a. What is the company's accounts receivable turnover for the year?
Answer

b. What is the company's average collection period for the year?
Answer

days

c. What is the company's inventory turnover for the year?
Answer

d. What is the company's days' sales in inventory for the year?
Answer

days

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