Answer and Explanation:
The formulas and calculations are shown below:
1. Current ratio = Total Current assets ÷ total current liabilities
= $4,120 ÷ $2,030
= 2.03 times
2. Account receivable turnover
= Net credit sales ÷ Average accounts receivable
where,
Net credit sales is $8,258 million
And, the Average accounts receivable would be
= (Accounts receivable, beginning of year + Accounts receivable, end of year) ÷ 2
= ($1,880 + $1,950) ÷ 2
= $1,915
So, the accounts receivable turnover ratio would be
= $8,258 ÷ $1,915
= 4.3 times
3. Average collection period is
= Total number of days in a year ÷ account receivable turnover ratio
= 365 days ÷ 4.31 times
= 84.6 days
4. Inventory turnover ratio =
= Cost of goods sold ÷ average inventory
where,
Average inventory = (Opening balance of inventory + ending balance of inventory) ÷ 2
= ($860 + $810) ÷ 2
= $835 million
And, the cost of good sold is $5,328 million
Now put these values to the above formula
So, the answer would be equal to
= $5,328 million ÷ $835 million
= 6.4 times
5. Days in inventory
= Total number of days in a year ÷ inventory turnover ratio
= 365 days ÷ 6.38 times
= 57.2 days
