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    2003 2004
    Accounts receivable $220,000 $180,000
    Cost of goods sold $600,000 $650,000
    Inventory (ending) $90,000 $70,000
    Net cash provided by operating activities $130,000 $85,000
    Net sales $1,200,000 $900,000
    Capital expenditures $30,000 $25,000
    Dividends $20,000 $10,000

    (A) What is the inventory turnover for 2003?
    (B) What is the number of days in inventory for 2003?
    (C) What is the account receivables turnover for 2003?
    (D) What is the average collection period for 2003? (In terms of days)

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    Solution Preview

    (A) What is the inventory turnover for 2003?

    Cost of goods sold (COGS) = $600,000
    Inventory = $90,000
    Therefore inventory turnover= $600,000 / $90,000 = 6.67 ...

    Solution Summary

    Inventory turnover, number of days in inventory, account receivables turnover, average collection period (In terms of days) are calculated.

    $2.49

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