Answer:
= 17.15 days (approx)
Explanation:
Given:
inventory turnover ratio = 20
Current ratio = 4.16
Current liabilities = $820,000.
Cash and Marketable securities = $657,096
Net sales = $28,400,000
Per day sale = ?
Calculation:
Current ratio = Current assets / current Liabilities
4.16 = Current assets / $820,000
4.16 x $820,000 = Current assets
$3,411,200 = Current assets
Inventory turnover ratio = Net sales / Average Inventory
20 = $28,400,000 / Inventory
$28,400,000 / 20 = Inventory
$1,420,000 = Inventory
Average Receivable = current assets - Cash and Marketable securities -Inventories
= $3,411,200 - $657,096 - $1,420,000
Average Receivable = $1,334,104
Outstanding daily sales = (Average receivables / Net sales )Number of days in a year
= $1,334,104 / $28,400,000)365
= 17.15 days (approx)
