Inventory Turnover ratio / Sales level
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1.
Bowa Construction's days sales outstanding is 50 days (on a 365-day basis). The company's accounts receivable equal $100 million and its balance sheet shows inventory equal to $125 million. What is the company's inventory turnover ratio?
2.
Last year Murphy Transportation had $5 million of sales, and it had $1.7 million of fixed assets that were being operated at 80% of capacity. What sales level could Murphy have achieved if it had operated at full capacity?
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Solution Summary
The solution explains how to calculate the inventory turnover ratio and the sales level for full capacity.
Solution Preview
1. Assume all sales are credit sales.
Days Sales Outstanding = 365X ...
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