The Following Information Is from Drayton Valley Company's December 31

question 16

Multiple Choice

The following information is from Drayton Valley Company's December 31, 2014 and 2013, financial statements: $$\begin{array} { l r r } & \underline { 2014 } & \underline { 2013 } \\\text { Accounts receivable } & \$ 80,000 & \$ 72,000 \\\text { Inventory } & 56,000 & 70,000 \\\text { Sales } & 380,000 & 372,000 \\\text { Cost of goods sold } & 228,000 & 216,000 \\\text { Net income } & 65,000 & 56,000\end{array}$$ What are Drayton Valley's accounts receivables turnover and inventory turnover ratios closest to? $\begin{array}{ll}\text { A/R } & \text { Inventory } \\\text { turnover } & \text { turnover }\\\text { A) } 2.85 & 3.96 \\\text { B) } 4.70 & 3.62 \\\text { C) } 5.00 & 3.62 \\\text { D) } 4.75 & 6.03\end{array}$

• A)Option A
• B)Option B
• C)Option C
• D)Option D

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Definitions:

Period of Time

A specific duration during which an event occurs or a condition remains in effect.

Cash Flows

The aggregated volume of money transactions both incoming and outgoing in a firm, markedly influencing its ability to provide liquidity.

Impairment Loss

The decrease in an asset’s net carrying value that exceeds the future undisclosed cash flow it should generate.

Carrying Value

Also known as the book value, it represents the value of an asset or liability as reported on the company's balance sheet, calculated as the original cost minus depreciation, amortization, or impairment costs.