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?