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AAA's inventory turnover ratio is 10.55 based on sales of $15,400,000. The firm's current ratio equals...

AAA's inventory turnover ratio is 10.55 based on sales of $15,400,000. The firm's current ratio equals 2.54 with current liabilities equal to $1,270,000. If the firm's cash and marketable securities equal $406,199, what is the firm's days sales outstanding? (Round your answer to two decimal places.)

Solutions

Expert Solution

66.83

Step-1:Calculation of current assets
Current assets = Current Liabilities * Current Ratio
= $     12,70,000.00 * 2.54
= $     32,25,800.00
Step-2:Calculation of Accounts receivable
Accounts Receivable = Current assets - Cash and marketable securities
= $     32,25,800.00 - $    4,06,199.00
= $     28,19,601.00
Step-3:Calculation of Accounts receivable turnover ratio
Accounts receivable turnover ratio = Sales / Accounts Receivable
= $ 1,54,00,000.00 / $ 28,19,601.00
= 5.46
Step-4:Calculation of days sales outstanding
Days sales outstanding = Days in a year / Accounts receivable turnover ratio
= 365 /                      5.46
= 66.83

jeff jeffy answered 1 year ago
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