Write 2 page essay on the topic ABC Fitness.ABC Fitness Activity ratios indicate how well a company manages to turn its resources into cash, revenue or profit. In the case of ABC Fitness, three signif

Write 2 page essay on the topic ABC Fitness.

ABC Fitness Activity ratios indicate how well a company manages to turn its resources into cash, revenue or profit. In the case of ABC Fitness, three significant ratios are computed to measure its relative efficiency. The appendix shows the average collection period, inventory turnover, and total assets turnover of the business organization. ABC Fitness has an average collection period of 10 days. Its inventory turnover is 10.23 while assets produced 1.79 times revenue. Please, refer to the appendix for the computation.

Appendix

Average Collection Period = Current Accounts Receivables/Average Daily Sales, where

Average Daily Sales = Annual Sales/360 days= $2, 004, 016 / 360 days= $5, 560/days

Average Collection Period=$55, 514 / $5,560/days

=9.98 or 10 days

Inventory Turnover = Cost of Goods Sold / Average Inventory= $1, 446, 733 / $141, 350= 10.23

Total Asset Turnover = Sales / Total Assets= $2, 004, 016 / $1, 117, 960= 1.79