Question

North Star had the following data (thousands of dollars):

Cash and equivalents	100.00
Fixed assets	283.50
Sales	1,000.00
Net income	50.00
Current liabilities	105.50
Notes payable to bank	20.00
Current ratio	3.00
DSO	40.55 days
ROE	12.00%

North Star has no preferred stock—only common equity, current liabilities, and long-term debt.

Find North Star’s (2) accounts receivable. Do not round intermediate calculations; round final answers to two decimal places.

a.Find North Star’s (2) accounts receivable.

b.Find North Star’s (3) current assets.

c.Find North Star’s (4) total assets.

d.Find North Star’s (6) common equity.

e.Find North Star’s (7) inventory.

f.Find North Star’s (9) long-term debt.

Answer 1

a. Accounts Receivable: $ 111.10 thousand.

DSO = (365 / Sales) * Accounts Receivable = 40.55

or 365 / 1,000 * Accounts Receivable = 40.55

Accounts Receivable = 40.55 / 0.365 = 111.10

b. Current Asset: $ 316.50 thousand

Current Ratio = Current Assets / Current Liabilities = Current Assets / 105.50 = 3

or Current Assets = 105.50 x 3 = 316.50

c. Total Assets = $ 600 thousand.

Total Assets = Fixed Assets + Current Assets = $ 283.50 + $ 316.50 = 600

d. Common Equity : $ 416.67 thousand.

Return on Equity = Net Income / Common Equity = 50 / Common Equity = 0.12

or Common Equity = 50 / 0.12 = 416.67

e. Inventory : $ 105.4 thousand.

f. Long term debt : $ 57.83 thousand.