The Following Information Pertains to Ortiz Company What Is the Accounts Receivable Turnover for Ortiz?
A)1

question 151

Multiple Choice

The following information pertains to Ortiz Company.Assume that all balance sheet amounts represent both average and ending balance figures.Assume that all sales were on credit. $\begin{array}{lr}\text { Assets }\\\text { Cash and short-term investments } & \$ 45,000 \\\text { Accounts receivable (net) } & 30,000 \\\text { Inventory } & 20,000 \\\text { Property, plant and equipment } & 210,000\\\text { Total Assets }&\$305,000\\\\\text { Liabilities and Stockholders' Equity }\\\text { Current liabilities } & \$ 50,000 \\\text { Long-term liabilities } & 95,000 \\\text { Stockholders' equity-common } & 160,000\\\text { Total Liabilities and Stockholders' Equity }&\$305,000\\\\\end{array}$ $\begin{array}{lr}\text { Income Statement }\\\text { Sales } & \$ 120,000 \\\text { Cost of goods sold } & 66,000\\\text { Gross profit } & 54,000 \\\text { Operating expenses } & 30,000\\\text { Net income }&\$14,000\\\\\text { Number of shares of common stock }&6,000 \\\text { Market price of common stock } &\$20\\\text { Dividends per share }&.50\end{array}$ What is the accounts receivable turnover for Ortiz?

• A)1.3 times
• B)1.1 times
• C)2.8 times
• D)12.7 times

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Definitions:

Book Value

The net value of a company's assets as recorded on the balance sheet, typically used as a measure to assess whether a stock is under- or overvalued.

Historical Cost

The original monetary value of an asset or transaction, based on the purchase price or cost at the time of acquisition.

Accumulated Depreciation

The total amount of depreciation expense that has been recorded against a company's assets over time.

Double-Declining-Balance Method

A method of accelerated depreciation which computes depreciation expense by doubling the straight-line rate and applying it to the book value of the asset at the beginning of each year.