Chapter 11
Financial Statement Analysis
576
AP-8B (
5
)
At the beginning of 2016, Percolate Corp. had inventory of $337,000. During the year, it
purchased $210,000 worth of raw materials and sold $505,000 worth of inventory. Determine
the inventory turnover ratio and the inventory days on hand ratio. Comment on the
company’s ability to sell its inventory, which has a shelf-life of 90 days.
AP-9B (
5
7
)
Below is the past annual information for Java Time Inc. All sales are on credit.
2016
2015
2014
2013
Sales
$44,500
$46,280
$47,900
$55,085
Sales Discounts
2,003
2,083
2,155
2,479
Net Sales
42,498
44,197
45,744
52,606
Accounts Receivable
6,130
5,885
5,649
5,084
Required
a) Calculate the following ratios for 2014, 2015 and 2016.
2016
2015
2014
Days-Sales-Outstanding
Accounts Receivable Turnover
