Calculate the average age of lozier inventory for 2010

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Reference no: EM13490152

The following are Lozier's 2010 and 2011 balance sheets and income statements for the years ended December 31, 2010 and December 31, 2011, respectively.

 

 

2010

 

2011

Cash

$  200,000

 

$  325,000

Accounts Receivable

400,000

 

450,000

Inventory

400,000

 

325,000

Intangible Assets

60,000

 

54,000

Total Assets

$1,060,000

 

$1,154,000

 

 

 

 

Accounts Payable

$   396,000

 

$   420,000

Short-term Notes Payable

100,000

 

100,000

Common Stock

3,000

 

3,000

Retained Earnings

564,000

 

636,000

Total Liabilities and Owner's Equity

$1,063,000

 

$1,159,000

 

 

 

 

 

2010

 

2011

Sales Revenue

$ 945,000

 

$1,190,000

Cost of Goods Sold

(400,000)

 

(500,000)

Advertising Expense

(20,000)

 

(25,000)

Office Supplies Expense

(10,000)

 

(13,000)

Interest Expense

(5,000)

 

(5,000)

Net Income

$   510,000

 

$   647,000

 

Required:

Using an Excel spreadsheet, calculate the following ratios for 2010 and 2011:

1.   Quick ratio

2.   Accounts receivable turnover ratio

3.   Average age of  receivables. Assume a 360-day calendar year.

4.   Inventory turnover ratio.

5.   Calculate the average age of Lozier's inventory for 2010 and 2011. Assume a 360-day calendar year.

6.   Given your calculations in parts 1-5, what conclusions might you draw about Lozier's business operations?

Reference no: EM13490152

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