Question:
The 2013 income statement of Anderson Medical Supply Company reported net sales of $8 million, cost
of goods sold of $4.8 million, and net income of $800,000. The following table shows the company’s
comparative balance sheets for 2013 and 2012:
Some industry averages for Anderson’s line of business are
Inventory turnover 5 times
Average collection period 25 days
Asset turnover 1.8 times
Required:
Assess Anderson’s asset management relative to its industry.
Answer:
Turnover ratios for Anderson Medical Supply Company for 2013:
The 2013 income statement of Anderson Medical Supply Company reported net sales of $8 million, cost
of goods sold of $4.8 million, and net income of $800,000. The following table shows the company’s
comparative balance sheets for 2013 and 2012:
Some industry averages for Anderson’s line of business are
Inventory turnover 5 times
Average collection period 25 days
Asset turnover 1.8 times
Required:
Assess Anderson’s asset management relative to its industry.
Answer:
Turnover ratios for Anderson Medical Supply Company for 2013:
