Jim short’s company makes clothing for schools. sales in 2013 were

Jim Short’s Company makes clothing for schools. Sales in 2013 were $4,820,000. Assets were as follows:

cash 163000
accounts receivable 889000
inventory 411000
net plant and equipment 520000
total assets 1983000

a. compute the following

1. accounts receivable turnover

2. inventory turnover

3. fixed asset turnover

4. total asset turnover

b. in 2014, sales increased to $5,740,000 and the assets for that year were as follows:

cash 163000
accounts receivable 924000
inventory 1063000
net plant and equipment 520000
total assets 2670000

Compute the four ratios again.

c. indicate if there is an improvement or decline in total asset turnover, and based on the other ratios, indicate why this development has taken place

Solution:

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