 # Question & Answer: Question 7 (9 points) Question 7 Unsaved The following financial information is for Alpha Corporation are for the fiscal yea…..

Question 7 (9 points) Question 7 Unsaved The following financial information is for Alpha Corporation are for the fiscal years ending 2017 & 2016 (all balances are normal): Item/Account 2017 2016 Cash \$26,000 \$16,000 Accounts Receivable 40,000 50,000 Inventory 30,000 22,000 Current Liabilities 76,000 42,000 Net Sales (all credit) 390,000 360,000 Cost of Goods Sold 260,000 250,000 Use this information to determine for FY 2017: (Round & enter your answers to one decimal place and enter the value.)

1. the Accounts Receivable turnover ratio

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Question & Answer: Question 7 (9 points) Question 7 Unsaved The following financial information is for Alpha Corporation are for the fiscal yea…..
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2. Average Accounts Receivable collection period

3. Gross Profit Margin

Average AR=(Beginning balance+ending balance)/2

= (\$40000+\$50000)/2=\$45000

1.AR turnover ratio=Sales/Average AR

=(\$390,000/\$45000)=8.7(Approx).

2.Average AR collection period=365/AR turnover ratio

=365/8.7=42.1 days(Approx_)(please note that intermediate calculations have not been rounded off].

3.Gross Profit =Sales-COGS

=(\$390,000-\$260,000)

=\$130,000.

hence Gross Profit margin=Gross Profit /Sales

=(130000/390,000)

=33.3%(Approx).