In: Finance

# Sigma Limited has sales of $100 million, cost of goods sold of$60 million, assets of...

Sigma Limited has sales of $100 million, cost of goods sold of$60 million, assets of $120 million, accounts receivables of$20 million and inventory of $30 million. Calculate days' sales in receivables ratio. ## Solutions ##### Expert Solution Solution: (a) When the no. of days in a year is taken as 360 days The formula for calculating the days’ sales in receivables ratio is = ( Accounts receivable / Sales ) * 360 As per the information given in the question we have Accounts receivable =$ 20 million   ;   Sales = $100 million Applying the above information in the formula we have = ($ 20 million / $100 million ) * 360 = 0.20 * 360 = 72 days Thus the days’ sales in receivables ratio = 72 days ( When a year = 360 days is used ) (b) When the no. of days in a year is taken as 365 days The formula for calculating the days’ sales in receivables ratio is = ( Accounts receivable / Sales ) * 365 As per the information given in the question we have Accounts receivable =$ 20 million   ;   Sales = $100 million Applying the above information in the formula we have = ($ 20 million / $100 million ) * 365 = 0.20 * 365 = 73 days Thus the days’ sales in receivables ratio = 73 days ( When a year = 365 days is used ) ## Related Solutions ##### A small business has sales of$2 million, cost of goods sold of $12 million, net... A small business has sales of$2 million, cost of goods sold of $12 million, net profit of$34,500,net fixed assets of $200,000, and total asset turnover of 5.25. What is the value of current assets? ##### Question 8: The following company has sales of$30 million and a cost of goods sold...
Question 8: The following company has sales of $30 million and a cost of goods sold of$18 million. The balance sheet for period ending 31 December 2019 for this company appears below: Assets                                                      $000 Liabilities and Shareholder Equity$000 Cash                                                         2500   Accounts Payable                                    1600 Accounts Receivable                             4400 Other Payables                                           900 Inventory                                                1500 Accruals                                                      1100 Total Current Assets                            8400 Total Current Liabilities                          3600 Property Plant and Equipment         10500 Long Term Debt                                        2500 Total Assets                                         18900 Total Liabilities                                         6100 Issued Equity               ...
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Dickson City Company has annual sales of $5 million, while the cost of goods sold is$3.2 million. All sales are made on a cash basis. The owner of Dickson has come up with the plan of giving credit to the customers. He believes that this will increase the sales by 25% without increasing any of the fixed costs. He thinks that 20% of the customers will pay within 30 days, 40% within 60 days, 37% within 90 days, and...
##### Cost of goods available for sales for Sigma Company is 420050, gross profit was 25%, sales...
Cost of goods available for sales for Sigma Company is 420050, gross profit was 25%, sales 200500. What is the cost of ending finished goods inventory?
##### Williams & Sons last year reported sales of $17 million,cost of goods sold (COGS) of... Williams & Sons last year reported sales of$17 million, cost of goods sold (COGS) of $12 and an inventory turnover ratio of 2. The company is now adopting a new inventory system. If the new system is able to reduce the firm's inventory level and increase the firm's inventory turnover ratio to 3 while maintaining the same level of sales and COGS, how much cash will be freed up? Do not round intermediate calculations. Round your answer to the... ##### Williams & Sons last year reported sales of$9 million, cost of goods sold (COGS) of...
Williams & Sons last year reported sales of $9 million, cost of goods sold (COGS) of$6 million, and an inventory turnover ratio of 2. The company is now adopting a new inventory system. If the new system is able to reduce the firm's inventory level and increase the firm's inventory turnover ratio to 3 while maintaining the same level of sales and COGS, how much cash will be freed up? Do not round intermediate calculations. Enter your answer in...