Question

It takes a firm exactly 180 days to sell and replace its existing inventory. The firm has sales of $28,000, cost of goods sold of $15,000, and cash of $7,000. The firm’s total current liabilities are $23,000. If the firm has a current ratio of 0.75, what is the days’ sales in receivables

Answer 1

The firm's accounting profit is calculated by subtracting the total costs from the sales revenue. With sales revenue of $1 million and total costs of $950,000, the firm's accounting profit would be $50,000.

Step-by-step explanation:

The question is asking how to calculate the days' sales in receivables, but the information provided is insufficient to directly solve this part of the question. However, it is possible to answer the self-check question provided for reference. The firm's accounting profit is calculated by subtracting the total costs from the sales revenue. In the provided example, if a firm had sales revenue of $1 million last year and spent $600,000 on labor, $150,000 on capital, and $200,000 on materials, the firm's accounting profit would be:

• Sales Revenue: $1,000,000
• Total Costs (Labor + Capital + Materials): $600,000 + $150,000 + $200,000 = $950,000
• Accounting Profit: $1,000,000 - $950,000 = $50,000

Therefore, the firm's accounting profit is $50,000.