calculate the firm’s total annual sales

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Antbowen

Oct 29, 2007, 09:50 AM

You have the following information on the You Can Do It Corp.:

Current liabilities $100000
Current ratio 2.0
Quick ratio 1.4
Inventory turnover 6x
Gross profit margin .20

Given these figures, calculate the firm’s total annual sales (assume that all sales are on credit). Show each step and all formulas.

rehmanvohra

Aug 20, 2009, 07:03 AM

You should have submitted your own work for guidance. However, without solving it for you, I can guide you as to how to go about it.
You have CL. Calculate CA busing CR and QA using QR. The difference is the value of inventory. Use this figure and the turnover rate to get cost of sales. Use the Cost of sales firgure to detgermine the sales using GP ratio.