Selected data from the financial statements are provided in the following table:
$\begin{array}{lrr}&\text { Year } 2&\text { Year } 1\
\text { Accounts receivable } & \$ 120,000 & \$ 76,000 \
\text { Inventory } & 24,000 & 32,000 \
\text { Total assets } & 900,000 & 760,000 \
\text { Net sales } & 760,000 & 540,000 \
\text { Cost of goods sold } & 320,000 & 420,000
\end{array}$
-Refer to the figure Rags to Riches.Which of the following would be found through ratio analysis of the company's financial statements?

Question

Selected data from the financial statements are provided in the following table:
 $\begin{array}{lrr}&\text { Year } 2&\text { Year } 1\
\text { Accounts receivable } & \$ 120,000 & \$ 76,000 \
\text { Inventory } & 24,000 & 32,000 \
\text { Total assets } & 900,000 & 760,000 \
\text { Net sales } & 760,000 & 540,000 \
\text { Cost of goods sold } & 320,000 & 420,000
\end{array}$
-Refer to the figure Rags to Riches.Which of the following would be found through ratio analysis of the company's financial statements?

Quizplus · Accepted Answer

The accounts receivable turnover ratio in Year 2 is calculated by dividing net sales by the average accounts receivable. For Year 2, this is $760,000 / [($120,000 + $76,000) / 2] = 7.76, making option A correct. Options B, C, and D are incorrect based on the provided data: COGS decreased, not increased; accounts receivable increased by $44,000, not $22,000; and total assets increased, not decreased.

Selected Data from the Financial Statements Are Provided in the Following