Reference no: EM132381882

Question

Use the information below to caculate the accounts receivable and inventory turnover ratios. Then use that information to answer Question

Use the Worksheet tab to develop your answers and then record your answers in Blackboard.

Stanley Corporation has no material problem with uncollectible accounts or obsolete inventory. All sales and purchases are on account. The company provided the following information for the year ending 20X7:

Total sales $ 2,600,000

Beginning accounts receivable 700,000

Total purchases of inventory 1,800,000

Beginning inventory 50,000

Collections on accounts receivable 2,400,000

Payments on accounts payable 1,850,000

Cost of goods sold 1,775,000

1. Calculate the "accounts receivable turnover ratio."

2. Calculate the "inventory turnover ratio."

3.  If Stanley's competitors have a receivables turnover ratio of "6" and an inventory turnover ratio of "4," would you initially conclude that Stanley is better or worse than its competitors in managing receivables and inventory?