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The Kretovich Company had a quick ratio of 1.0, a current ratio of 3.5, a days' sales outstanding of 36.5 days (based on a 365-day year), total current assets of $980,000, and cash and marketable securities
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16 votes
16 votes
The Kretovich Company had a quick ratio of 1.0, a current ratio of 3.5, a days' sales outstanding of 36.5 days (based on a 365-day year), total current assets of $980,000, and cash and marketable securities of $115,000. What were Kretovich's annual sales

User H Walters
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1 Answer

7 votes
7 votes

Answer:

Total sales = $1650000

Step-by-step explanation:

Below is the given values:

Quick ratio = 1.0

Current ratio = 3.5

Current assets = $980000

Marketable security = $115000

Current ratio=Current assets/Current liabilities

3.5 = 980000 / Current liabilities

Current liabilities = 980000/3.5

Current liabilities = 280000

Quick ratio=Quick assets/Current liabilities

1.0 =Quick assets/280000

Quick assets = 1.0 x 280000 = 280000

Quick assets = Marketable security + Accounts receivable

Accounts receivable = 280000 - 115000

Accounts receivable = $165000

Days sales outstanding=(Accounts receivable/Total sales)*Days in a period

36.5 = (165000 / total sales ) x 365

Total sales=$165,000/(36.5 days/365 days

Total sales = $1650000

User Junior Jiang
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