Question #1 Using Financial Ratios to Improve Working Capital Accounts (5 Points)
Bobs accountant found ways that ABC company could generate more cash by improving two areas, Average Collection period and ABC’s inventory turnover. With the following information, calculate how much cash ABC company could generate within the next six months if she were able to improve her average collection period to 25 days and the inventory turnover to 5 times.
Revenue: 1,750,000
Cost of Sales 1,200,000
Trade Receivables 192,000
Inventories 250,000
Question #2: Calculating ROA Using the Dupont Financial System (5 Points)
The following Accounts are included in Marks financial statements:
Cash $15,000
Revenue 2,200,000
Current assets $400,000
Prepaid expenses $43,500
Non-current assets $1,500,000
Trade receivables $157,000
Depreciation/amortization $25,000
Cost of sales $1,700,000
Distribution costs $165,000
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