The rate of inventory turnover and days’ inventory outstanding of M Corporation.

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Answer 1

Question

Chapter 12, Problem 12.7S

a.

To determine

To Compute: The rate of inventory turnover and days’ inventory outstanding of M Corporation.

b.

To determine

To Compute: The days’ sales outstanding.

c.

To determine

To Compute: The accounts payable turnover and day’s payable outstanding.

d.

To determine

To Compute: The cash conversion cycle in days.

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(Learning Objectives 1, 7: Show how to speed up cash flow from receivables;evaluate liquidity through ratios) Geneva Co., Inc., an electronics and appliance chain,reported these figures in millions of dollars:Net sales .........................................Receivables at end of year...............2019$523,1253,8602018$543,1254,510Requirements1. Compute Geneva’s days’ sales in receivables or days’ sales outstanding (DSO) during2019. (For this exercise, use “net sales” for “net credit sales” when calculating ratios.)2. Is Geneva’s DSO long or short? Kurzwel Networks takes 39 days to collect its averagelevel of receivables. Domarko Freight, the overnight shipper, takes 33 days. What causesGeneva’s collection period to be so different?

(Learning Objective 7: Evaluate liquidity using the quick [acid-test] ratio and days’sales in receivables) Northern Products reported the following amounts in its 2019 financialstatements. The 2018 amounts are given for comparison.2019 2018Current assets:Cash............................................ $ 9,500Short-term investments................ 7,000Accounts receivable..................... $70,100Less: Allowance foruncollectibles.......................$86,500(7,500) (5,500) 64,600Inventory..................................... 190,000Prepaid insurance ........................ 2,200Total current assets..................... 273,300Total current liabilities.................... 106,000Net sales (all on account) ................$ 9,50010,50079,000189,0002,200290,20099,0001,077,000 734,000Requirements1. Compute Northern’s quick (acid-test) ratio at the end of 2019. Round to two decimalplaces. How does the quick ratio compare with the industry average of 0.92?2. Compare days’ sales…

(Learning Objectives 1, 4, 5, 6: Apply GAAP for revenue, receivables,collections, and uncollectibles using the percent-of-sales method; account for notesreceivable) Hopewell Shipping Corporation is an overnight shipper. Since it sells on credit, thecompany cannot expect to collect 100% of its accounts receivable. At October 31, 2018, and2019, respectively, Hopewell reported the following on its balance sheet (in millions of dollars):October 31,2019 2018Accounts receivable.................................................. $4,200 $4,000Less: Allowance for uncollectible accounts...............Accounts receivable, net........................................... $4,030 $3,840(170) (160)During the year ended October 31, 2019, Hopewell earned service revenue and collected cashfrom customers. Assume uncollectible-account expense for the year was 5% of service revenueon account and Hopewell wrote off uncollectible receivables and made other adjustments as necessary (see below). At year-end,…

Answer 2

Question

Chapter 12, Problem 12.7S

a.

To determine

To Compute: The rate of inventory turnover and days’ inventory outstanding of M Corporation.

b.

To determine

To Compute: The days’ sales outstanding.

c.

To determine

To Compute: The accounts payable turnover and day’s payable outstanding.

d.

To determine

To Compute: The cash conversion cycle in days.

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Answer 3

Question

Chapter 12, Problem 12.7S

a.

To determine

To Compute: The rate of inventory turnover and days’ inventory outstanding of M Corporation.

b.

To determine

To Compute: The days’ sales outstanding.

c.

To determine

To Compute: The accounts payable turnover and day’s payable outstanding.

d.

To determine

To Compute: The cash conversion cycle in days.

Expert Solution & Answer

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Answer 4

Question

Chapter 12, Problem 12.7S

a.

To determine

To Compute: The rate of inventory turnover and days’ inventory outstanding of M Corporation.

b.

To determine

To Compute: The days’ sales outstanding.

c.

To determine

To Compute: The accounts payable turnover and day’s payable outstanding.

d.

To determine

To Compute: The cash conversion cycle in days.

Expert Solution & Answer

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Answer 5

Chapter 12, Problem 12.7S

a.

To determine

To Compute: The rate of inventory turnover and days’ inventory outstanding of M Corporation.

b.

To determine

To Compute: The days’ sales outstanding.

c.

To determine

To Compute: The accounts payable turnover and day’s payable outstanding.

d.

To determine

To Compute: The cash conversion cycle in days.

Answer 6

Chapter 12, Problem 12.7S

a.

To determine

To Compute: The rate of inventory turnover and days’ inventory outstanding of M Corporation.

Answer 7

Chapter 12, Problem 12.7S

a.

To determine

To Compute: The rate of inventory turnover and days’ inventory outstanding of M Corporation.

Answer 8

b.

To determine

To Compute: The days’ sales outstanding.

Answer 9

b.

To determine

To Compute: The days’ sales outstanding.

Answer 10

c.

To determine

To Compute: The accounts payable turnover and day’s payable outstanding.

Answer 11

c.

To determine

To Compute: The accounts payable turnover and day’s payable outstanding.

Answer 12

d.

To determine

To Compute: The cash conversion cycle in days.

Answer 13

d.

To determine

To Compute: The cash conversion cycle in days.

Answer 14

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Answer 15

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Answer 16

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Answer 17

Ch. 12 - Prob. 1QC Ch. 12 - Prob. 2QC Ch. 12 - Prob. 3QC Ch. 12 - Prob. 4QC Ch. 12 - Expressing accounts receivable as a percentage of...Ch. 12 - Kincaid Company reported the following data (in...Ch. 12 - Prob. 7QC Ch. 12 - Ratios that measure liquidity include all of the...Ch. 12 - Verba Corporation has an inventory turnover of 15...Ch. 12 - The measure of a companys ability to collect cash...

The rate of inventory turnover and days’ inventory outstanding of M Corporation.

Solution Summary: The author explains the rate of inventory turnover and days' inventory outstanding of M Corporation.

To Compute: The rate of inventory turnover and days’ inventory outstanding of M Corporation.

To Compute: The days’ sales outstanding.

To Compute: The accounts payable turnover and day’s payable outstanding.

To Compute: The cash conversion cycle in days.

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Chapter 12 Solutions