Question

SE 13-1--SE 13-5

Cambridge Business Publishers e ments Chapter 13 Analysis and intereson of Financ SHORT EXERCISES Use the following financial data for Brenner Instruments to answer Short Exercise 13-1 through 13.10 2019 (Thousands of Dollars, except Earnings per Share) Cost of goods sold. Earrings per share BRENNER INSTRUMENTS, INC. Balance Sheets Dec 31, 2019 Dec 31, 2018 (Thousands of Dollars) Assets $ 18,000 41.000 43,700 102.700 Accounts recebe (ne)... Inventory Total current assets...... Plantas (net)... 45,000 30,500 103,800 52.600 15.600 $172 000 13.000 $167.000 $ 6,000 22.500 18.700 Total assets .... . Liabilities and Stockholders' Equity Notes payable banks Accounts payable....... Accrued abilities. Total current abilities 9% bonds payable .... Total liabilities Common stock, $25 par value (2.000.000 shares) Retained earnings Total stockholders' equity.. Totabilities and stockholders' equity 45.000 40.000 85,000 50.000 37.000 31,300 72.000 $167.000 Industry Average Ratios for Competitors Quick ratio ..... . Current ratio Accounts receivable tumover... Inventory tumover. Debt-to-equity ratio.. Gross profit percentage ...... Return on sales Return on assets. 5.9 times 3.5 times 0.73 428 percent 4.5 percent 7.6 percent LO4 SE13-I. Quick Ratio Calculate the company's quick ratio for 2019 and compare the result to the industry average. SE13-2. Current Ratio Calculate the company's current ratio for 2019 and compare the result to the indus try average SELB3. Accounts Receivable Turnover Calculate the company's accounts receivable tumover for and compare the result to the industry average. SELL Inventory Turnerer Calculate the company's inventory turnover for 2019 and compare the to the industry average LO4 OOOOO LO4 LO4 SELS. Debit-to-Equity Ratio Calculate the company's 2019 debt-to-equity ratio and compare there the industry average

Answer 1

(1)

Quick ratio = (cash + accounts receivable)/current liabilities

= ($18300 + $46000)/$45000

= 1.4 times

Quick ratio is greater than the industry average

(2)

current ratio = current assets/current liabilities

= $103800/$45000

= 2.3 times

Current ratio is lower than the industry average

(3)

Accounts receivable turnover ratio = net credit sales/average accounts receivable

= $210000/$43500

= 4.8 times

Accounts receivable turnover is less than the industry average

Where average accounts receivable = (beginning accounts receivable + ending accounts receivable)/2

= ($46000 + $41000)/2 = $43500

(4)

Inventory turnover ratio = cost of goods sold/average inventory

= $125000/$41600

= 3 times

inventory turnover is less than the industry average

Where,

Average inventory = (beginning inventory + ending inventory)/2

= ($39500 + $43700)/2 = $41600