 # Question & Answer: The following financial information is for Alpha Corporation are for the fiscal years ending 2017 & 2016 (all balances are normal): It…..

The following financial information is for Alpha Corporation are for the fiscal years ending 2017 & 2016 (all balances are normal): Item/Account 2017 2016 Accounts Receivable \$9,800 \$9,400 Inventory 25,000 16,000 Net Sales (all credit) 80,000 71,000 Cost of Goods Sold 49,000 52,000 Net Income 7,200 6,900 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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2. average collection period accounts receivable

3. Gross Profit Margin

4. Profit Margin

1.

accounts receivable turnover ratio = (Net receivable sales / Average receivable sales ) = (\$80,000) /( ( \$9800 + \$9400)/2) = \$80,000 / \$9,600 = 8.33 times

2. average collection period accounts receivable = 365 / average receivable turnover ratio = 365/ 8.33 = 43.817~ 43.82 days

3. Gross Profit Margin = (Total sales – Cost of goods sold ) / Total sales

= (\$80,000 – \$49,000) / \$80,000 = 38.75%

4. Profit Margin =Net profit / Sales = \$7,200 / \$80,000= 9%