A company has total annual sales 25 on cash basis of Rs 3 000-00161

Online Quiz This subjective question is related to the book/course vu cs001 Computer Proficiency License . It can also be found in vu cs001 Mid Term Solved Past Paper No. 1.

Question 1: A company has total annual sales (25% on cash basis) of Rs.3,000,000 and a gross profit margin of 20 %. Its current assets are Rs. 500,000; current liabilities are Rs. 340,000; inventories are Rs. 260,000; and cash is Rs. 60,000.
Calculate:
(a) How much average inventory should be carried if management wants the inventory turnover to be 5 times
(b) How rapidly (in how many days) must accounts receivable be collected if management wants to have an average of Rs.240,000 invested in receivables(Assume a 365-day year.)

Answer:

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