Question

The following information is from Harrelson Inc.'s, financial statements. Sales (all credit) were $21.60 million for last year.    

Sales to total assets	1.80	times
Total debt to total assets	40	%
Current ratio	3.00	times
Inventory turnover	4	times
Average collection period	25	days
Fixed asset turnover	5	times

Complete the balance sheet: (Use a 360-day year. Do not round intermediate calculations. Input your answers in millions rounded to 2 decimal places.)

$ in millions $ in millions Cash Current debt Accounts receivable Long-term debt Inventory Total debt Total current assets Fixed assets Equity Total assets Total debt and stockholders' equity

Answer 1

Ans.	ASSETS	in millions	LIABILITIES	in millions
	Cash	0.78	Current debt	2.56
	Accounts receivables	1.5	Long - term debt	2.24
	Inventory	5.4	Total debt	4.8
	Total current assets	7.68
	Fixed assets	4.32	Equity	7.2
	Total assets	12	Total debt and stockholders' equity	12
	*Calculations:
1	Sales to Total assets =   Sales / Total assets
	1.80   = 21.60 / Total assets
	Total assets = 21.60 / 1.80
	$12 million
2	Total debt to Total assets = Total debt / Total assets
	0.40   =    Total debt / 12
	Total debt   =   12 * 0.40
	$4.8 million
3	Fixed assets turnover =   Sales / Fixed assets
	5   = 21.60 / Fixed assets
	Fixed assets = 21.60 / 5
	$4.32 million
4	Current assets = Total assets - Fixed assets
	12 - 4.32
	$7.68 million
5	Current ratio = Current assets / Current liabilities
	3 = 7.68 / Current liabilities
	Current liabilities = 7.68 / 3
	$2.56 million
6	Total debt = Current liabilities + Long term debt
	4.8 = 2.56 + Long term debt
	Long term debt = 4.8 - 2.56
	$2.24 million
7	Inventory turnover = Sales / Inventory
	4 = 21.60 / inventory
	Inventory = 21.60 / 4
	$5.4 million
8	Average collection period = No. of days in year / Receivables turnover
	25 =   360 / Receivables turnover
	Receivables turnover = 360 / 25
	14.4 times
	Receivables turnover = Sales / Receivables
	14.4 = 21.60 / Receivables
	Receivables   = 21.60 / 14.4
	$1.5 million
9	Current assets = Inventory + Receivables + Cash
	7.68 = 5.4 + 1.5 + Cash
	Cash = 7.68 - 5.4 - 1.5
	$0.78 million
10	Total debt and stockholder's equity = Total debt + Equity
	12 = 4.80 + Equity
	Equity = 12 - 4.80
	Equity   = 7.20
	*Total debt and stockholder's equity = Total assets