National, Inc For the Year Ending December 31, 2019 Calculate the Accounts Receivable Turnover Ratio for 2019

question 109

Multiple Choice

National, Inc. provides the following data: $$\begin{array} { | l | r | r | } \hline & { \underline { \underline { 2019 } } } &{ \underline { 2018 } } \\\hline \text { Cash } & \$ 45,000 & \$ 25,000 \\\hline \text { Accounts Receivable, Net } & 138,000 & 62,000 \\\hline \text { Merchandise Inventory } & 70,000 & 50,000 \\\hline \text { Property, Plant, and Equipment, Net } & \underline { 200,000 } & \underline { 120,000 } \\\hline \text { Total Assets } & \$ 453,000 & \$ 257,000 \\\hline\end{array}$$ For the year ending December 31, 2019:
$$\begin{array} { | l | r | } \hline \text { Net Credit Sales } & \$ 250,000 \\\hline \text { Cost of Goods Sold } & ( 110,000 ) \\\hline \text { Gross Profit } & \$ 140,000 \\\hline\end{array}$$ Calculate the accounts receivable turnover ratio for 2019. (Round your answer to two decimal places.)

• A) 5.00 times
• B) 3.28 times
• C) 2.50 times
• D) 1.81 times

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Definitions:

FIFO

"First In, First Out," an inventory valuation method where the first items purchased or produced are the first ones sold, impacting the value of remaining inventory.

Gross Profit

The financial measure obtained by subtracting the cost of goods sold from total sales revenue.

Ending Inventory

The worth of products ready for sale at the close of a financial period, determined by adding acquisitions to the initial stock and then deducting the expense of the goods that were sold.

FOB Shipping Point

A term indicating that the buyer takes responsibility for goods and their transportation costs once they leave the seller's premises.