For its most recent year a company had Sales (all on credit) of $830,000 and Cost of Goods Sold of $525,000. At the beginning of the year its Accounts Receivable were $80,000 and its Inventory was $100,000. At the end of the year its Accounts Receivable were $86,000 and its Inventory was $110,000. a) The inventory turnover ratio for the year was?
b) The accounts receivable turnover ratio for the year was?
c) On average how many days of sales were in Accounts Receivable during the year?
d) On average how many days of sales were in Inventory during the year?

A. 5 times per year

B. 10

C. 36.5 days

D. 73 days

Explanation:

A. Calculation for what The inventory turnover ratio for the year was

Inventory turnover ratio =$525,000/($100,000+$110,000/2)

inventory turnover ratio =5 times per year

B. Calculation for what The accounts receivable turnover ratio for the year was

Accounts receivable turnover ratio=$830,000/($80,000+$86,000/2)

accounts receivable turnover ratio=10

C. Calculation for On average how many days of sales were in Accounts Receivable during the year

Days sales in Account Receivable=($80,000+$86,000/2)/($830,000/365)

Days sales in Account Receivable=36.5 days

D. Calculation for On average how many days of sales were in Inventory during the year

Days of Sales in Inventory=($100,000+$110,000/2)/($525,000/365)

Days of Sales in Inventory=73 days

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