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    Asset activity ratios

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    Use the following information to answer the three questions that follow:
    ABC Fitness Company 000's
    Sales 1968.016
    Cost of Goods Sold 1466.733
    Gross Profit 501.283
    Selling and Ad. Expenses 361.402
    Depreciation 35.7
    Operating Income (EBIT) 104.181
    Interest Expense 34.482
    Other Expense 14.124
    EBT 83.823
    Taxes 24.701
    Net Income 59.122
    Cash 89.469
    Net Receivables 55.514
    Inventories 322.433
    Prepaids 8.775
    Total Current Assets 476.191
    Gross Plant & Equipment 955.661
    Accumulated Dep 338.513
    Net Plant & Equip 617.148
    Other Assets 24.621
    Total Assets 1117.96
    Notes Payable 1.127
    Accounts Payable 144.638
    Taxes Payable 16.797
    Accrued Expense 98.233
    Total Current Liabilities 260.795
    Long-Term Debt 415.138
    Deferred Taxes 20.396
    Total Liabilities 696.329
    Common Stock 0.32
    Capital Surplus 242.843
    Retained Earnings 178.468
    Total Equity 421.631
    Total Liabilities and Equity 1117.96
    Calculate the following asset activity ratios for the end of 1999.
    1. Average Collection Period
    2. Inventory Turnover
    3. Total Asset Turnover

    problem is attached

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    Solution Preview

    In the calculation of these ratios average figures are taken. Since the balance sheet is for only one year we take the figures for that year only.
    1. Average Collection Period

    Average collection period=Avergae accounts receivables/(Annual ...

    Solution Summary

    The Asset activity ratios (Average Collection Period, Inventory Turnover, Total Asset Turnover ) are calculated for the data given for the income statement and balance sheet of ABC Fitness Company.