Brick Works, Inc.had a current ratio of 1.5 to 1 on December 31 of the current year.On that date, the company's assets were as follows: $\begin{array}{lr}
\text { Cash } & \$ 100,000 \
\text { Accounts receivable, net } & 800,000 \
\text { Inventory } & 960,000 \
\text { Prepaid expenses } & 25,000 \
\text { Equipment, net } & \underline{2,600,000} \
\text { Total assets } & \$ 4,485,000 \
\end{array}$ What impact will collecting $56,000 due from customers have on Brick Work's inventory turnover?
A)It will increase.
B)It will decrease.
C)It will have no effect.
D)The amount of current liabilities is needed to determine the answer.

Question

Quizplus · Accepted Answer

Collecting $56,000 due from customers increases cash and decreases accounts receivable, but it does not affect inventory or cost of goods sold, which are the components used to calculate inventory turnover. Therefore, collecting accounts receivable has no direct impact on inventory turnover.

Brick Works, Inc What Impact Will Collecting $56,000 Due from Customers Have on on December