Question

BALANCE SHEET ANALYSIS Complete the balance sheet and sales information using the following financial data: Total assets turnover: 1.3x Days sales outstanding: 32 daysa Inventory turnover ratio: 7x Fixed assets turnover: 3x Current ratio: 2x Gross profit margin on sales: (Sales Cost of goods sold)/Sales = 30% Calculation is based on a 365-day year. Do not round intermediate calculations. Round your answer to the nearest cent. Balance Sheet Cash $ Current liabilities 81,250 Accounts receivable Long-term debt Common stock Inventories Retained earnings Fixed assets 97,500 Total liabilities and equity Total assets $325,000 $ Sales Cost of goods sold tA-

Answer 1

First let us calculate the level of sales,

The level of sales can be calculated by the total asset turnover ratio,

Sales/ total assets = 1.3

Sales/ $325,000 = 1.3

So, the level of sales are = $422,500

Next, let is calculate the accounts receivables,

Accounts receivables /sales * 365 = 32

AR / $422,500 = 0.0877

Accounts receivables = $37,041.09

Now, the COGS is 70% of the sales as the gross profit margin is 30%,

COGS = 70% * Sales

= 70 % * $422,500

= $29,5750

Now, the inventory turnover ratio :

COGS/ Inventory = 7

Inventory = $29,5750/ 7

=$42,250

Fixed asset turnover,

Sales/ fixed assets = 3

$422,500/ fixed assets = 3

Fixed assets = $140,833.33

The current ratio is :

Current assets/ current liabilities = 2

Current assets = total assets - fixed assets

= $325,000 - $140,833.33

= $184,166.67

So, the current assets = cash + accounts receivables + inventory

$184,166.67 = cash + $37,041.09+ $42,250

Cash = $10,4875.58

Since, current assets / current liabilities = 2

$184,166.67 / CL = 2

Current liabilities = $92,083.33

Now, since the total assets side and the liability and equity side must equate,

So,

$325,000 = $92,083.33 + $81,250 + common stock + $97,500( equity)

Common stock = $541.66.67

Total liabilities and equity = $325,000