Question

Balance Sheet Current assets Cash 640,000 Acc receivable not given Inventories 1,150,000 Fixed assets 3,710,000 TOTAL ASSETS 6,400,000 Current liabilities Acc payable not given Long-term debt 2,600,000 Common stock 900,000 Retained earnings 2,150,000 TOTAL LIAB and EQUITY 6,400,000 Income Statement Sales 12,800,000 Operating expense 9,730,000 EBIT 3,070,000 Interest expense 338,000 EBT 2,732,000 Taxes 1,093,000 Net income 1,639,000 What is the firm's days sales outstanding

Answer 1

25.66

Step-by-step explanation:

The computation of the firm day sales outstanding is shown below:

But before that we need to determine the account receivable

Accounts Receivables = Total Assets - Fixed Assets - Inventories - Cash

= $6,400,000 - $3,710,000 - $1,150,000 - $640,000

= $900,000

Now

Days Sales Outstanding is

= Accounts Receivables ÷ Net Sales × 365

= $900,000 ÷ $12,800,000 × 365

= 25.66