Financial Accounting: Three practice problems on turnover ratios
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The Speed-O Company makes scooters for kids. Sales in 2008 were $8,000,000. Assets were as follows:
cash $200,000
Accounts receivable 1,600,000
inventory 800,000
net plant and equipment 1,000,000
total assets 3,600,000
Requirement 1:
Compute the following(round your answer to 2 decimal places)
accounts receivable turnover ______________
inventory turnover ______________
fixed asset turnover ______________
total asstes urnover ______________
Requirement 2:
In 2009, sales increased to $10,000,000 and the assets for that year were as follows:
cash $200,000
acoounts receivable 1,800,000
inventory 2,200,000
net plant and equipment 1,050,000
total assets 5,250,000
Once again, compute the four ratios.
accounts receivable turnover ____________
inventory turnover ____________
fixed asste turnover ___________
total assets turnover ___________
Requirement 3:
Indicate if there is an improvement or decline in total asset turnover.
A. Improvement
B. Decline
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The expert examines the three practice problems on turnover ratios.
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