Explain the inventory turnover ratio

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Reference no: EM133116467

The following financial statements relate to the ABC Company:

Assets

£

Liabilities & Net worth

£

Cash 

28,500

Trade creditors 

116,250

Debtors 

270,000

Notes payable (9%)

54,000

stock

649,500

Other current liabilities

100,500

Total current assets

948,800

Long term debt (10%)

300,000

Net fixed assets

285,750

Long term bonds

663,000

 

1,233,750

 

1,233,750

Income statement for the year ended 31st March 2020

 

£

Sales 

1,972,500

Less cost of sales 

1,368,000

Gross profit

604,500

Selling & administration expenses

498,750

Earnings before interest & tax 

105,750

Interest expense 

34,500

 

71,250

Estimated taxation (40%)

28,500

Earnings after interest and tax

42,750

Required

Calculate:

  1. Inventory turnover ratio
  2. Quick /acid test ratio
  3. Total assets turnover
  4. Net profit margin
  5. Debtors collection period

Reference no: EM133116467

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