| Galaxy United, Inc. 2015 Income Statement ($ in millions) |
|
| Net sales | $8,500 |
| Less: Cost of goods sold | 7,220 |
| Less: Depreciation | 410 |
| Earnings before interest and taxes | 870 |
| Less: Interest paid | 82 |
| Taxable Income | 788 |
| Less: Taxes | 276 |
| Net income | $ 512 |
| Galaxy United, Inc. 2014 and 2015 Balance Sheets ($ in millions) |
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| 2014 | 2015 | 2014 | 2015 | |||
| Cash | $ 130 | $ 150 | Accounts payable | $1,120 | $1,140 | |
| Accounts rec. | 950 | 780 | Long-term debt | 990 | 1,259 | |
| Inventory | 1,480 | 1,520 | Common stock | $3,140 | $2,940 | |
| Sub-total | $2,560 | $2,450 | Retained earnings | 500 | 711 | |
| Net fixed assets | 3,190 | 3,600 | ||||
| Total assets | $5,750 | $6,050 | Total liab. & equity | $5,750 | $6,050
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What is the days’ sales in receivables? (use 2015 values)
21.4 days
47.3 days
43.6 days
33.5 days
81.0 days
Answer:
days’ sales in receivables = 33.5 days
Working notes for the above answer is as under
Days sales in receivable
= 365 / receivable Turn over Ratio
receivable Turn over Ratio
= Credit Sales/ Account receivable
=8500 / 780
=8500 / 780
=10.89
Days sales in receivable
= 365 / receivable Turn over Ratio
=365/10.50
=33.50 days
