Question

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BALANCE SHEET ANALYSIS

Complete the balance sheet and sales information using the following financial data:

Total assets turnover: 1.6x
Days sales outstanding: 30 days^a
Inventory turnover ratio: 4x
Fixed assets turnover: 3.5x
Current ratio: 2x
Gross profit margin on sales: (Sales - Cost of goods sold)/Sales = 25%
^aCalculation is based on a 365-day year. Do not round intermediate calculations. Round your answer to the nearest cent.

Balance Sheet
Cash	$		Current liabilities	$
Accounts receivable			Long-term debt	60,000
Inventories			Common stock
Fixed assets			Retained earnings	100,000
Total assets	$400,000		Total liabilities and equity	$
Sales	$		Cost of goods sold	$

Answer 1

Total assets turnover = Sales / Total Assets

1.6 = Sales / $400,000

Sales = 1.6 x $400,00

Net Sales = $640,000

Gross Profit Ratio = 25%

(Sales - Cost of goods sold) / Sales = 0.25

($640,000 - Cost of goods sold) / $640,000 = 0.25

$640,000 - Cost of goods sold = $160,000

Cost of goods sold = $640,000 - $160,000

Cost of goods sold = $480,000

Days sales outstanding: 30 days

Accounts Receivable = (30 / 365) * Sales

Accounts Receivable = (30 / 365) * $640,000

Accounts Receivable = $52,603

Inventory turnover ratio: 4x

Inventory turnover ratio = Cost of Goods sold / Inventory

4 = $480,000 / Inventories

Inventories = $480,000 / 4

Inventories = $120,000

Fixed assets turnover: 3.5x

Fixed assets turnover ratio = Sales / Fixed Assets

3.5 = $640,000 / Fixed Assets

Fixed Assets = $640,000 / 3.5

Fixed Assets = $182,857

Total Assets = $400,000

$400,000 = Cash + Accounts receivable + Inventories + Fixed assets

$400,000 = Cash + 52,603 + 120,000 + 182,857

Cash = $400,000 - (52,603 + 120,000 + 182,857)

Cash = $400,000 - $355,460

Cash = $44,540

Current ratio: 2x

Current ratio = Current Assets / Current Liabilities

Current Assets = Cash + Accounts receivable + Inventories

2 = (44,540 + 52,603 + 120,000 ) / Current Liabilities

2 = 285,714 / Current Liabilities

Current Liabilities = 217,143 / 2

Current Liabilities = $108,572

We know, Total Assets = Total liabilities and equity

That means, Total liabilities and equity = $400,000

Total liabilities and equity = Current liabilities + Long-term debt + Common stock + Retained earnings

$400,000 =  108,572 + 60,000 + Common stock + 100,000

$400,000 = 268,572 + Common stock

Common stock = 131,428

Balance Sheet $ $ Current Liablities Cash 44,540 108,572 Accounts Receivable Long-term debt 52,603 60,000 Common Stock 131,428 Inventories 120,000 Retained Earnings Fixed Assets 182,857 100,000 Total Liabilities and equity Total Assets 400,000 400,000 Sales Cost of goods sold 480,000 640,000

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