S.M., Inc. had total sales of $400,000 in 2014 (70 percent of its sales are credit). The company's gross profit margin is 10%, its ending inventory is $80,000, and its accounts receivable is $25,000. What amount of funds can be generated by the company if it increases its inventory turnover ratio to 10.0 and reduces its average collection period to 20 days?

Question

Quizplus · Accepted Answer

The Answer of S.M., Inc. had total sales of $400,000 in 2014 (70 percent of its sales are credit). The company's gross profit margin is 10%, its ending inventory is $80,000, and its accounts receivable is $25,000. What amount of funds can be generated by the company if it increases its inventory turnover ratio to 10.0 and reduces its average collection period to 20 days?

SM, Inc Had Total Sales of $400,000 in 2014 (70 Percent