Question

Franklin Aerospace has a quick ratio of 2.00x, $38,250 in cash, $21,250 in accounts receivable, some inventory, total current assets of $85,000, and total current liabilities of $29,750. The company reported annual sales of $800,000 in the most recent annual report. Over the past year, how often did Franklin Aerospace sell and replace its inventory

Answer 1

Answer:

Over the past year, the company sold and replaced its inventory 31.37x

Explanation:

In order to calculate how often did Franklin Aerospace sell and replace its inventory we would have to calculate first the inventory with the following formula:

Current assets=cash+inventory+account receivables

inventory=Current assets-cash-account receivables

inventory=$85,000-$38,250-$21,250

inventory=$25,500

So, to calculate how often did Franklin Aerospace sell and replace its inventory we would have to calculate the Inventory turnover ratio as follows:

Inventory turnover ratio=sales/inventory

Inventory turnover ratio=$800,000/$25,500

Inventory turnover ratio=31.37x

Therefore, over the past year, the company sold and replaced its inventory 31.37x