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Required: Compute The Following

The document contains financial data from Fluffy Trading for 2016 and 2017. It provides calculations for current ratio, acid-test ratio, receivable turnover ratio, average collection period, inventory turnover ratio, and average sales period. The current ratio in 2016 was 2.9 and the acid-test ratio was 2. In 2017, the receivable turnover ratio was 8.6 times and the average collection period was 42.34 days. The inventory turnover ratio was 1.5 times and the average sales period was 257.9 days.

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326 views2 pages

Required: Compute The Following

The document contains financial data from Fluffy Trading for 2016 and 2017. It provides calculations for current ratio, acid-test ratio, receivable turnover ratio, average collection period, inventory turnover ratio, and average sales period. The current ratio in 2016 was 2.9 and the acid-test ratio was 2. In 2017, the receivable turnover ratio was 8.6 times and the average collection period was 42.34 days. The inventory turnover ratio was 1.5 times and the average sales period was 257.9 days.

Uploaded by

clarizel
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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1. The following are data from Fluffy Trading on December 31, 2016.

Cash                                          Php 410 000


Trade Receivables                           120 000
Merchandise Inventory                   235 000
Property, Plant and Equipment     455 000
Trade Payables                                 265 000

Required :  COMPUTE THE FOLLOWING:

A.  CURRENT RATIO

Current Ratio = 765, 000


265, 000

Current Ratio = 2.9

B.  ACID-TEST RATIO

 Acid-test Ratio = 530, 000


265, 000

Acid-test Ratio = 2

2.  Refer to Number 1.  On December 31, 2017, Fluffy Trading's Trade Receivables amounted to Php 145 000 and
Merchandise Inventory was Php 265 000.  Net Sales was Php 1 250 000 and Cost of Goods Sold was Php 375 000

REQUIRED :  COMPUTE THE FOLLOWING:

A.  RECEIVABLE TURNOVER

A/R Turnover Ratio = Net sales


Ave. A/R

A/R Turnover Ratio = 1 250 000


145 000
A/R Turnover Ratio = 8.6 times

B.  AVERAGE COLLECTION PERIOD

Days sales Outstanding = x 145 000 365


1 250 000
Days sales Outstanding = 42.34 days

C.  INVENTORY TURNOVER

Cost of goods sold


Inventory Turnover Ratio = Ave. Inventory

Inventory Turnover Ratio = 375 000


250 000

Inventory Turnover Ratio = 1.5

D.  AVERAGE SALES PERIOD

Days Sales in Inventory = Ending Inventory x 365


Cost of goods sold

Days Sales in Inventory = 265 000 x 365


375 000

Days Sales in Inventory = 257.9

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