Journal Unit 5 1. Accounts Receivable Turnover Ratio (AR Ratio): Formula: AR Ratio = Net Credit Sales / Average Accounts Receivable Net Credit Sales: 2021: $100,051 million (from Consolidated Statements of Comprehensive Income) 2022: $108,044 million (from Consolidated Statements of Comprehensive Income) Average Accounts Receivable: Calculated as: (Beginning Accounts Receivable + Ending Accounts Receivable) / 2 2021: ($64,848 million + $65,321.5 million) / 2 = $65,08 $108,044 million / $68,217 million = 1.61 Interpretation: The AR Ratio indicates how many times P&G collects its average accounts receivable balance in a year. A higher ratio suggests faster collection and potentially lower credit risk. P&G's AR Ratio increased from 1.53 in 2021…show more content… A lower DSR indicates faster collection efficiency. P&G's DSR decreased from 239 days in 2021 to 227 days in 2022, reflecting a faster collection process. 3. What is the difference between a'smart' and a'smart'? Inventory Turnover Ratio (Inventory TO Ratio): Formula: Inventory TO Ratio = Cost of Goods Sold (COGS) / Average Inventory Cost of Goods Sold (COGS): 2021: $77,053 million (from Consolidated Statements of Comprehensive Income) 2022: $83,077 million (from Consolidated Statements of Comprehensive Income) Average Inventory: Calculated as above Calculation: 2021: Inventory TO Ratio = $77,053 million / $34,829.5 million = 2.21 2022: Inventory A higher ratio suggests efficient inventory management and potentially lower holding costs. P&G's Inventory TO Ratio increased slightly from 2.21 in 2021 to 2.26 in 2022, indicating a minor improvement in inventory turnover. 4. What is the difference between a.. Days' Sales in Inventory Ratio (DSI Ratio): Formula: DSI Ratio = 365 days / Inventory to Ratio Calculation: 2021: DSI Ratio = 365 days / 2.21 = 165 days 2022: DSI Ratio = 365 days / 2.26 = 161 days Interpretation: The DSI Ratio represents the average number of days it takes P&G to sell their inventory. A lower DSI ratio indicates faster inventory turnover and potentially lower
