Answer
Solution:-
(dollars in thousands)
For this Year
1. Accounts receivable turnover = 7.38(rounded)
2. Average collection period = 50 days(rounded)
3. Inventory turnover = 5.81(rounded)
4. Average sale period = 63 days (rounded)
5. Operating cycle = 113 days
6. Total asset turnover = 1.64 (rounded)
Work Step by Step
$Working:- $
$ 1.\ Accounts\ receivable\ turnover = \frac{Sales\ on\ account }{Average\ accounts\ receivable\ balance
} = \frac{$79,000}{($12,300+$9,100)/2} = \frac{$79,000}{$10,700} = 7.38(rounded) $
$ 2.\ Average\ collection\ period = \frac{365\ days }{Accounts\ receivable\ turnover
} = \frac{365}{7.38} = 50\ days\ (rounded) $
$ 3.\ Inventory\ turnover= \frac{Cost\ of\ goods\ sold }{Average\ inventory\ balance} = \frac{$52,000}{($9,700+$8,200)/2} = \frac{$52,000}{$8,950} =5.81(rounded) $
$ 4.\ Average\ Sale\ period = \frac{365\ days }{Inventory \ turnover
} = \frac{365}{5.81} = 63\ days\ (rounded) $
$ 5.\ Operating\ cycle = {Average\ Sale\ period }+ { Average\ collection\ period} = {50\ days }+ {63\ days } = 113\ days $
$ 6.\ Total\ asset \ turnover = \frac{Sales}{Average\ Total\ assets
} = \frac{$79,000}{($50,280+$45,960/2} = \frac{$79,000}{$48,120} = 1.64(rounded) $
