Question

JPJ Corp has sales of $ 1.16 ​million, accounts receivable of $ 47,000​, total assets of $ 4.81 million​ (of which $ 3.05 million are fixed​ assets), inventory of $ 153,000​, and cost of goods sold of $ 590,000.
a. What is​ JPJ's accounts receivable​ days?
b. Fixed asset​ turnover?
c. Total asset​ turnover?
d. Inventory​ turnover?

Answer 1

Answer:

a. JPJ's accounts receivable​ days:  14.79 days

b. JPJ's Fixed asset​ turnover:  0.38

c. JPJ's Total asset​ turnover: 0.24

d. JPJ's Inventory​ turnover: 3.86

Explanation:

a. The accounts receivable​ days is calculated by using following formula:

The accounts receivable​ days = (Accounts receivable/Annual Sales) x Number of days in the year = ($47,000/$1,160,000) x 365 = 14.79 days

Fixed asset​ turnover = Net Sales/Fixed​ assets = $1,160,000/$3,050,000 = 0.38

Total asset turnover helps investors understand how effectively companies are using their assets to generate sales. Total asset turnover is calculated by using following formula:

Total Asset Turnover =  Total Sales/Total Assets  = $1,160,000/$4,810,000 = 0.24

Inventory​ turnover = Cost of goods sold/Inventory = $590,000/$153,000 = 3.86