B C D 3 The Tabor Sales Company had a gross profit margin (gross profits + sales) of 30 percent and sales of $9 million last year. Seventy-five percent of the firm's sales are on credit and the remainder are cash sales. Tabor current assets equal $1.5 million, its current liabilities equal $300,000, and it has $100,000 in cash plus marketable securities. Assume 365 days in a year. a. If Tabor's accounts receivable are $562,500, what is its average collection period? b. If Tabor reduces its days in receivable (average collection period) to 20 days, what will be its new level of accounts receivable? c. Tabor's inventory turnover ratio is 9 times. What is the level of Tabor's inventories? 4 Complete the steps below using cell references to given data or previous calculations. In some cases, a simple cell reference is all you need. To copy/paste a formula across a row or down a column, an absolute cell reference or a mixed cell reference may be preferred. If a specific Excel function is to be used, the directions will specify the use of that function. Do not type in numerical data into a cell or function. Instead, make a reference to the cell in which the data is found. Make your computations only in the blue cells highlighted below. In all cases, unless otherwise 5 directed, use the earliest appearance of the data in your formulas, usually the Given Data section. 6 DATA 7 Gross profit margin 30% 8 Sales $9,000,000 9 Credit sales as percentage of total sales 10 Current assets $1,500,000 11 Current liabilities $300,000 12 Cash & marketable securities $100,000 13 Accounts receivable $562,500 14 Average collection period (after reduction) 15 Inventory turnover 75% 20 9 16 17 SOLUTION 18 a. If Tabor's accounts receivable are $562,500, what is its average collection period? 19 Average collection period 20 b. If Tabor reduces its days in receivable (average collection period) to 20 days, what will be its new level of accounts 21 receivable? 22 Accounts receivable 23 SE 24 c. Tabor's inventory turnover ratio is 9 times. What is the level of Tabor's inventories? 25 Inventory 26