Question

The Kretovich Company had a quick ratio of 1.0, a current ratio of 3.5, a days' sales outstanding of 36.5 days (based on a 365-day year), total current assets of $980,000, and cash and marketable securities of $115,000. What were Kretovich's annual sales

Answer 1

Answer:

Total sales = $1650000

Explanation:

Below is the given values:

Quick ratio = 1.0

Current ratio = 3.5

Current assets = $980000

Marketable security = $115000

Current ratio=Current assets/Current liabilities

3.5 = 980000 / Current liabilities

Current liabilities = 980000/3.5

Current liabilities = 280000

Quick ratio=Quick assets/Current liabilities

1.0 =Quick assets/280000

Quick assets = 1.0 x 280000 = 280000

Quick assets = Marketable security + Accounts receivable

Accounts receivable =  280000 - 115000

Accounts receivable = $165000

Days sales outstanding=(Accounts receivable/Total sales)*Days in a period

36.5 = (165000 / total sales ) x 365

Total sales=$165,000/(36.5 days/365 days

Total sales = $1650000