## FA Mod 7 Turnover ratios practice exam questions

 Author Message NEAS Supreme Being Group: Administrators Posts: 4.2K, Visits: 1.2K FA Module 7 Turnover ratios practice exam questions(The attached PDF file has better formatting.)A firm’s financial statements show    Calendar Year 20XX-1    Calendar Year 20XXNet revenue    541    547Cost of goods sold     270    238Net income     117    141    December 31, 20XX-1    December 31, 20XXAccounts receivable     85    91Inventory         113    144Accounts payable     48    59All purchases and sales are on credit.Question 7.2: Receivables turnoverWhat is the receivables turnover in 20XX?Answer 7.2: 547 / ( (85 + 91) / 2) = 6.216(receivables turnover = credit sales / average accounts receivable)Question 7.3: Days of sales outstanding (DSO)What is the number of days of sales outstanding (DSO) in 20XX?Answer 7.3: 365 / 6.216 = 58.72(days of sales outstanding = days in year / receivables turnover)Question 7.4: Inventory turnoverWhat is the inventory turnover in 20XX?Answer 7.4: 238 / ( (113 + 144) / 2) = 1.852(inventory turnover = cost of goods sold / average inventory) Question 7.5: Days of inventory on hand (DOH)What is the number of days of inventory on hand (DOH) in 20XX?Answer 7.5: 365 / 1.852 = 197.08(days of inventory on hand = days in year / inventory turnover) Question 7.6: Purchases from suppliersWhat is the purchases of inventory from suppliers in 20XX?Answer 7.6: 238 + (144 – 113) = 269(purchases of inventory from suppliers = cost of goods sold + Δ(inventory) )Question 7.7: Payables turnoverWhat is the payables turnover in 20XX?Answer 7.7: 269 / ( (48 + 59) / 2) = 5.028(payables turnover = purchases of inventory from suppliers / (average accounts payable) )Question 7.8: Days of payablesWhat is the number of days of payables in 20XX?Answer 7.8: 365 / 5.028 = 72.59(days of payables = days in year / payables turnover)Question 7.9: Cash conversion cycleWhat is the cash conversion cycle in 20XX?Answer 7.9: 58.72 + 197.08 – 72.59 = 183.21(cash conversion cycle = days sales outstanding + days inventory on hand – number of days of payables) Attachments FA Module 7 Turnover ratios practice exam questions.pdf (157 views, 35.00 KB)
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