Compute the receivable turnover and inventory turnover

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Question - Modern Suits Rental has been in business for four years. Because the company has recently had a cash flow problem, management wonders whether there is a problem with receivables or inventories. Here are selected figures from the company's financial statements:

 

2011

2010

2009

2008

Net sales

$288.0

$224.0

$192.0

$160.0

Cost of goods sold

180.0

144.0

120.0

96.0

Accounts receivable (net)

48.0

40.0

32.0

24.0

Merchandise inventory

56.0

44.0

32.0

20.0

Accounts payable

26.0

20.0

16.0

10.0

Compute the receivable turnover, inventory turnover, and payables turnover for each of the four years. And comment on the results relative to the cash flow problem that the firm has been experience. Merchandise inventory was $22,000, accounts receivables were $22,000, and accounts payable were $8,000 in 2007.

Reference no: EM131812567

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