0 yr sh odopoun I Sane 18 we ag eo pes Buri ry abv) soviet an A) CA EN ETE ANJ Nt boi. bl pr sown af sami vgs sg od pg 0 ipsa a» "row - -TERUEISQRS SoU YoTyM ‘CURUOISIA 10 1824S are sosuadxa 2910...

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Problems4.18, 4.19, 4.20, 4.24


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Answered 1 days AfterNov 20, 2022

Answer To: 0 yr sh odopoun I Sane 18 we ag eo pes Buri ry abv) soviet an A) CA EN ETE ANJ Nt boi. bl pr sown...

Nitish Lath answered on Nov 21 2022
41 Votes
Solution 4.18
a. Receivable ratio for year 1 and year 2
    Ratio name
     
    Nucor
    AK Steel
    
     
    Year 1
    Year 2
    Year 1
    Year 2
    
    Formula
    Figures
    Ratio
    Figures
    Ratio
    Figures
    Ratio
    Figures
    Ratio
    A/R turnover
    Net sales
    16593
     12.38
    23663
     16.66
    7003
     10.21
    7644
     13.36
     
    Average receivables
    1340
     
    1420
     
    686
     
    572
     
b. The reason for difference in ratios of both firm is mainly due to higher receivables outstanding ratio in AK Steel as compared to Nucor and the ratio of Nucor is higher i.e. 12.38 times vs 10.21 times.
c. The A/R turnover ratio has been increased in year 2 due to increase in sales revenue with significant margin whereas in AK Steel the ratio has been increased in year 2 due to decline in AR balances.
d. Inventory turnover ratio for year 1 and year 2
    Ratio name
     
    Nucor
    AK Steel
    
     
    Year 1
    Year 2
    Year 1
    Year 2
    
    Formula
    Figures
    Ratio
    Figures
    Ratio
    Figures
    Ratio
    Figures
    Ratio
    Inventory turnover
    Cost of goods sold
    13035
     9.51
    19612
     9.78
    5904
     7.85
    6479
     10.67
     
    Average inventory
    1371
     
    2005
     
    752
     
    607
     
e. The reason for difference in ratios of both firm is mainly due to higher inventory in AK Steel as compared to Nucor and the ratio of Nucor is higher i.e. 9.51 times vs 7.85...
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