J P] Corp has sales of $6 million, accounts receivable of $950,000, total assets of$25 million ( of which $18 million are fixed assets), inventory of $860,000, andcost of goods sold of $2,200,000. What is J P] ’5 accounts receivable days? Fixedasset turnover? Total asset turnover? Inventory turnover?

The accounts receivable days: 57.79 days

Fixed asset turnover: 0.33 times

Total Asset Turnover: 0.24 times

Inventory turnover: 2.56 times

Explanation:

The accounts receivable days is calculated by the formula:

The accounts receivable days = (Accounts receivable/Annual Sales) x 365 = ($950,000/$6,000,000) x 365 = 57.79 days

Fixed asset turnover = Net Sales/Fixed assets = $6,000,000/$18,000,000 = 0.33 times

Asset turnover helps investors understand how effectively companies are using their assets to generate sales. Asset turnover is calculated by using following formula:

Total Asset Turnover =  Total Sales/Total Assets  = $6,000,000/$25,000,000 = 0.24 times

Inventory turnover = Cost of Goods Sold/Inventory = $2,200,000/$860,000 = 2.56 times