Question

What are the sample of

Account Receviable Turnover Rate

Inventory Turnover rate

Plant property equipment turnover rate

Answer 1

Solution :-

1. Account Receivable turnover = Net Credit Sales / Account Receivables

If the ratio which shows how effectively a company can give or recover its credit Sales money

Such as if in a Company Net Credit Sales = $2,000,000

and Account Receivable = $400,000

Then the Account Receivable turnover ratio = $2,000,000 / $400,000 = 5 times

2. Inventory Turnover Ratio = Cost of goods Sold / Average Inventory

It is the ratio which we calculate to know the inventory holding by company in realtion to Cost of goods sold

Suppose Cost of Goods Sold = $1,800,000

Average Inventory = $300,000

then inventory Turnover ratio = $1,800,000 / $300,000 =  6 times

3. Plant property equipment turnover rate = It is used to measure the ratio of sales as compared to investment in Pant property equipment

= Net Sales / Plant property equipment

Net sales = $2,000,000

PPE = $250,000

Now PPE turnover ratio = $2,000,000 / $250,000 = 8 times

If there is any doubt please ask in comments