MBA FPX5010 FM Assessment3 1.docx MBA-FPX5010 Ace Company Performance Evaluation Capell

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MBA FPX5010 FM Assessment3 1.docx MBA-FPX5010 Ace Company Performance Evaluation Capella University MBA-FPX5010- Accounting Methods for Leaders This performance evaluation of Ace Company will rev... iew the company™s financial performance by analyzing the trend for accounts receivable, inventory turnover and credit worthiness. Ace Company is requesting a $3 million 10-year loan to purchase production equipment and develop accompanying software. To determine the accounts receivable trend, we must calculate the average collection period formula: average accounts receivable (balance sheet) ÷ (net sales ÷ 365 Days). This would depict the amount of time it takes for Ace Company collect payments owed by clients (Kenton, 2021). The lower average collection period, the faster the company collects. For 2016, the equation is $3,900 ÷ ($18,000 ÷ 365 Days) = 79.1 days is the collection period. For 2017, the equation is $4,000 ÷ ($20,000 ÷ 365 Days) = 73 days. When comparing equations, Ace Company has clearly made improvements over the last year however, most companies average collection periods are within 30 days, while Ace is averaging about 70+ days. Inventory turnover measures the number of times a business sells and replaces its products or goods (inventory). This allows a company to assess how fast inventory is selling and how effectively it meets market demands. Most industries indicate a good inventory turnover ratio is between 5 and 10 (Henry, 2020b). Ace Company currently has an inventory turnover rati. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. .. . . . . . . . . . . . . . . . . . .. . . . . [Show More]

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