Question

Ratio Analysis

Byers Company presents the following condensed income statement for 2019 and condensed December 31, 2019, balance sheet:

Income Statement
Sales (net)			$267,000
Less:
Cost of goods sold	$160,000
Operating expenses	62,000
Interest expense	11,000
Income taxes	10,000
Total expenses			(243,000)
Net income			$24,000

Balance Sheet
Cash	$10,000		Current liabilities	$40,000
Receivables (net)	22,000		Bonds payable, 10%	110,000
Inventory	56,000		Common stock, $10 par	100,000
Long-term investments	30,000		Additional paid-in capital	95,000
Property and equipment (net)	282,000		Retained earnings	55,000
Total Assets	$400,000		Total Liabilities and Shareholders' Equity	$400,000

Additional information:

1. The company's common stock was outstanding the entire year.
2. Dividends of $1.50 per share on the common stock were declared in 2019.
3. On December 31, 2019, common stock is selling for $20 per share.
4. On January 1, 2019, the accounts receivable (net) balance was $24,000, total assets amounted to $380,000, and total shareholders' equity was $241,000.
5. Of the company's net sales, 78% are on credit.
6. The company operates on a 365-day business year.

Required

On the basis of the preceding information, compute the following ratios for the Byers Company:

1. Return on assets (Round tax rate to the nearest whole percent in your intermediate calculations.)

2. Receivables turnover (in days): (Round your intermediate calculation to two decimal places.)

Answer 1

Solution 1) 2 Return on assets = Net Income / Total assets = 24000 / 400000 = 6% Receivables Turnover Ratio - Credit Sales Average Accounts receivable = (267000 x 78%)/((24000+ 22000)]/3] - 9.05

Answer 2

1.) 2.4 2.)40.07 3.)16.85 4.)8.99 5.).68