Answer:
Account receivable turnover ratio = 13.3
ROE= 4.19
Explanation:
Inventory turnover = 5 times
Cost of goods sold = $4.8 million
we know that:
Inventory turnover ratio = Cost of goods sold / Average inventory
5 = 4.5 / Average inventory
Average inventory = 4.5 / 5 = $ 0.9 million.
Account receivable (2016)= 700,000
Account receivable (2015)=500,000
we know that:
Average account receivable = [(open) A/c receivables + (end) a/c receivable ] / 2
= (500,000+700,000) /2
Average account receivable = $ 600,000
we know that: Account receivable turnover ratio= net credit sales / average account receivable.
= 8000000/600000
Account receiable turnover ratio = 13.3.
Asset turnover ratio= 1.8 times
sales = $ 8000000
we know that total asset turnover ratio= total sales / Total asset
1.8 = 8000000/Total assets
Total assets = 8000000/1.8
Total assets =$4,444,444
Return on equity = Net income /Average shareholder equity
Average shareholder equity =[(open) equity + (end) equity)] / 2
Paid-up capital + retained earning (2016)=1000+1140=2140,000
Paid-up capital + retained earning (2015)=1000+670= 1670,000
Average shareholder equity =( 2140,000+1670,000) / 2
=$1905,000
Return on equity = 8000000/1905000 = 4.19
