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alculate ratios related to how quickly the company pays its trade debt and how quickly it collects from its customers. These are known as Accounts Payable (AP) Turnover and Accounts Receivable (AR) Turnover. The formula for AP Turnover is: Cost of Goods Sold/average accounts payable. The formula for AR Turnover is: credit sales/average accounts receivable. Calculate the AP and AR Turnover for each of 2011-2014. Interpret your calculations: what does this information mean? How is the company doing?

alculate ratios related to how quickly the company pays its trade debt and how quickly it collects from its customers. These are known as Accounts Payable (AP) Turnover and Accounts Receivable (AR) Turnover. The formula for AP Turnover is: Cost of Goods Sold/average accounts payable. The formula for AR Turnover is: credit sales/average accounts receivable. Calculate the AP and AR Turnover for each of 2011-2014. Interpret your calculations: what does this information mean? How is the company doing?

Fundamentals of Financial Management (MindTap Course List)
Fundamentals of Financial Management (MindTap Course List)
15th Edition
ISBN:9781337395250
Author:Eugene F. Brigham, Joel F. Houston
Publisher:Eugene F. Brigham, Joel F. Houston
Chapter4: Analysis Of Financial Statements
Section: Chapter Questions
Problem 24P: Income Statement for Year Ended December 31, 2018 (Millions of Dollars) Net sales 795.0 Cost of...
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  1. Calculate ratios related to how quickly the company pays its trade debt and how quickly it collects from its customers. These are known as Accounts Payable (AP) Turnover and Accounts Receivable (AR) Turnover.  The formula for AP Turnover is:  Cost of Goods Sold/average accounts payable. The formula for AR Turnover is: credit sales/average accounts receivable.   Calculate the AP and AR Turnover for each of 2011-2014.  Interpret your calculations: what does this information mean?  How is the company doing?
ANNETILIA ML. ναιιανιαιινιωιωι WINES Comparative Income Statement ($M) For the Years Ended Dec 31, 2009 to 2014 Sales Cost of Goods Sold Gross Profit Selling and Administration Depreciation Operating Profit Interest Earnings Before Taxes Taxes Net Income 2011 2012 2013 2014 $725.45 $793.34 $814.55 $856.00 2009 2010 $287.14 $299.45 $209.69 $210.45 $506.91 $559.53 $595.34 $629.43 $ 77.45 $ 89.00 $218.54 $233.81 $219.21 $226.57 $ 57.34 $60.06 $104.14 $125.53 $136.57 $160.23 $7.53 $13.54 $21.54 $ 20.89 $21.22 $26.54 $ 12.58 $15.40 $ 92.86 $ 87.39 $61.42 $ 39.80 $9.41 $ 12.53 $35.51 $24.67 $17.96 $13.01 $ 3.17 $2.87 $57.35 $ 62.72 $ 43.46 $26.79 1.01 $0.92 $18.35 $20.07 $13.91 $ 8.57 $ 2.16 $ 1.95 $39.00 $42.65 $29.55 $18.22 $ tax rate 32% 1 - tax rate 68% Net Income +1(1-tax rate) $ 8.57 Cash A/R Inventory Appendix A2: Canadian Motorbikes Comparative Balance Sheet ($M) For the Years Ended Dec 31, 2009 to 2014 2009 Total Current Assets Land, Plant and Equipment Other Assets Total Assets 32% 68% $10.46 $ 63.15 A/P Current Portion of LT Debt Total Current Liabilities Long-term Debt Total Liabilities Shareholders' Equity Total Liabilities and Equities 32% 68% 32% 32% 32% 68% 68% 68% $59.43 $ 41.76 $ 27.07 2011 2014 2010 2012 2013 $ 10.76 $ 20.56 $ 25.78 $ 38.55 $ 34.21 $ 29.75 $ 45.01 $ 48.54 $ 84.89 $ 85.39 $ 95.32 $ 99.23 $ 17.12 $79.66 $ 82.69 $ 79.30 $ 53.88 $ 75.33 $72.89 $148.76 $193.36 $203.24 $183.41 $204.31 $ 54.32 $ 162.28 $184.18 $ 178.01 $ 182.74 $211.48 $ 2.47 $ 5.39 $ 8.38 $ 8.82 $9.49 $ 11.65 $129.68 $316.43 $385.92 $390.07 $375.64 $427.44 $ 53.77 $ 90.73 $112.15 $109.96 $129.04 $189.84 $ 2.88 $ 18.09 $ 18.77 $ 14.32 $ 8.56 $ 6.22 $ 52.82 $185.45 $193.84 $161.98 $109.47 $294.27 $324.76 $286.26 $ 20.21 $ 22.16 $ 61.16 $ 103.81 $129.68 $316.43 $385.92 $390.07 $ 56.65 $108.82 $130.92 $124.28 $137.60 $ 196.06 $104.68 $ 79.80 $242.28 $275.86 $ 133.36 $ 151.58 $375.64 $427.44
Transcribed Image Text:ANNETILIA ML. ναιιανιαιινιωιωι WINES Comparative Income Statement ($M) For the Years Ended Dec 31, 2009 to 2014 Sales Cost of Goods Sold Gross Profit Selling and Administration Depreciation Operating Profit Interest Earnings Before Taxes Taxes Net Income 2011 2012 2013 2014 $725.45 $793.34 $814.55 $856.00 2009 2010 $287.14 $299.45 $209.69 $210.45 $506.91 $559.53 $595.34 $629.43 $ 77.45 $ 89.00 $218.54 $233.81 $219.21 $226.57 $ 57.34 $60.06 $104.14 $125.53 $136.57 $160.23 $7.53 $13.54 $21.54 $ 20.89 $21.22 $26.54 $ 12.58 $15.40 $ 92.86 $ 87.39 $61.42 $ 39.80 $9.41 $ 12.53 $35.51 $24.67 $17.96 $13.01 $ 3.17 $2.87 $57.35 $ 62.72 $ 43.46 $26.79 1.01 $0.92 $18.35 $20.07 $13.91 $ 8.57 $ 2.16 $ 1.95 $39.00 $42.65 $29.55 $18.22 $ tax rate 32% 1 - tax rate 68% Net Income +1(1-tax rate) $ 8.57 Cash A/R Inventory Appendix A2: Canadian Motorbikes Comparative Balance Sheet ($M) For the Years Ended Dec 31, 2009 to 2014 2009 Total Current Assets Land, Plant and Equipment Other Assets Total Assets 32% 68% $10.46 $ 63.15 A/P Current Portion of LT Debt Total Current Liabilities Long-term Debt Total Liabilities Shareholders' Equity Total Liabilities and Equities 32% 68% 32% 32% 32% 68% 68% 68% $59.43 $ 41.76 $ 27.07 2011 2014 2010 2012 2013 $ 10.76 $ 20.56 $ 25.78 $ 38.55 $ 34.21 $ 29.75 $ 45.01 $ 48.54 $ 84.89 $ 85.39 $ 95.32 $ 99.23 $ 17.12 $79.66 $ 82.69 $ 79.30 $ 53.88 $ 75.33 $72.89 $148.76 $193.36 $203.24 $183.41 $204.31 $ 54.32 $ 162.28 $184.18 $ 178.01 $ 182.74 $211.48 $ 2.47 $ 5.39 $ 8.38 $ 8.82 $9.49 $ 11.65 $129.68 $316.43 $385.92 $390.07 $375.64 $427.44 $ 53.77 $ 90.73 $112.15 $109.96 $129.04 $189.84 $ 2.88 $ 18.09 $ 18.77 $ 14.32 $ 8.56 $ 6.22 $ 52.82 $185.45 $193.84 $161.98 $109.47 $294.27 $324.76 $286.26 $ 20.21 $ 22.16 $ 61.16 $ 103.81 $129.68 $316.43 $385.92 $390.07 $ 56.65 $108.82 $130.92 $124.28 $137.60 $ 196.06 $104.68 $ 79.80 $242.28 $275.86 $ 133.36 $ 151.58 $375.64 $427.44
Appendix A3: Canadian Motorbikes Industry Averages Current Ratio Cash Ratio Inventory Turnover (days) A/R Turnover (days) A/P Turnover (days) Cash Conversion Cycle Fixed Assets Turnover Total Assets Turnover Debt Ratio Times Interest Earned Gross Profit Margin Operating Profit Margin Net Profit Margin Retum on Assets Retum on Equity 1.25 0.27 44.12 32.45 60.23 16.35 3.72 2.05 0.54 9.33 32.00% 14.00% 8.50% 17.46% 38.25%
Transcribed Image Text:Appendix A3: Canadian Motorbikes Industry Averages Current Ratio Cash Ratio Inventory Turnover (days) A/R Turnover (days) A/P Turnover (days) Cash Conversion Cycle Fixed Assets Turnover Total Assets Turnover Debt Ratio Times Interest Earned Gross Profit Margin Operating Profit Margin Net Profit Margin Retum on Assets Retum on Equity 1.25 0.27 44.12 32.45 60.23 16.35 3.72 2.05 0.54 9.33 32.00% 14.00% 8.50% 17.46% 38.25%
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