Question
In: Finance
The Kretovich Company had a quick ratio of 1.1, a current ratio of 3.5, a days'...
The Kretovich Company had a quick ratio of 1.1, a current ratio of 3.5, a days' sales outstanding of 32.0 days (based on a 365-day year), total current assets of $630,000, and cash and marketable securities of $115,000. What were Kretovich's annual sales? Do not round intermediate calculations. Round your answer to the nearest cent.
Solutions
Expert Solution
Current ratio = Current assets / Current liabilities
3.5 = $630,000 / Current liabilities
Current liabilities = $630,000 / 3.5
= $180,000
Quick ratio = (Accounts receivable + Cash and securities) / Current liabilities
- = (Accounts receivable + $115,000) / $180,000
Accounts receivable + $115,000 = 1.1 × 180,000
Accounts receivable + $115,000 = $198,000
Accounts receivable = $198,000 - $115,000
= $83,000
Days’ sales outstanding = (Accounts receivable / Annual sales) × Days in a year
32 = ($83,000 / Annual sales) × 365
(32 / 365) = $83,000 / Annual sales
Annual sales = $83,000 × (365 / 32)
= $946,718.75
Answer: The amount of annual sales is $946,718.75.
jeff jeffy answered 9 months agoRelated Solutions
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$ ______________
Tours Company Ratios: Current Ratio = 1.30 Quick Ratio = 0.84 Average Collection Period = 72 Days Fixed...
Tours Company Ratios:
Current Ratio = 1.30
Quick Ratio = 0.84
Average Collection Period = 72
Days
Fixed Assets Turnover = 1.15
times
Return On Equity = 0.142
The sector in which Tour operates has the following ratios:
Current
ratio 1.26
Quick
ratio 0.8
Average collection
period 72
Fixed assets turnover
ratio 1.10
Return on
Equity 0.45
Comment on the financial performance of Tours?
Long-term debt ratio 0.3 Times interest earned 10.0 Current ratio 1.1 Quick ratio 1.0 Cash ratio...
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0.3
Times interest earned
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Current ratio
1.1
Quick ratio
1.0
Cash ratio
0.4
Inventory turnover
3.0
Average collection period
73
days
Use the above information from the tables to work out the
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on equity. Note: Turnover and the average collection period are
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