Question

Exercise 13-19 (Part Level Submission) Presented below is information related to Riverbed Inc. RIVERBED INC. BALANCE SHEET DECEMBER 31, 2017 Cash $44,700 Notes payable (short-term) $50,400 Receivables $109,000 Accounts payable 31,900    Less: Allowance 15,000 94,000 Accrued liabilities 5,000 Inventory 171,700 Common stock (par $5) 261,100 Prepaid insurance 8,100 Retained earnings 141,500 Land 20,000 Equipment (net) 151,400    $489,900 $489,900 RIVERBED INC. INCOME STATEMENT FOR THE YEAR ENDED DECEMBER 31, 2017 Sales revenue $1,401,100 Cost of goods sold    Inventory, Jan. 1, 2017 $200,200    Purchases 792,700    Cost of goods available for sale 992,900    Inventory, Dec. 31, 2017 (171,700 )    Cost of goods sold 821,200 Gross profit on sales 579,900 Operating expenses 170,200 Net income $409,700

(a) Compute the following ratios or relationships of Riverbed Inc. Assume that the ending account balances are representative unless the information provided indicates differently. (Round answers to 2 decimal places, e.g. 1.59 or 45.87%.) (1) Current ratio times (2) Inventory turnover times (3) Accounts receivable turnover times (4) Earnings per share $ (5) Profit margin on sales % (6) Return on assets on December 31, 2017 %

Answer 1

1) Current ratio = Current assets/Current liabilities = 318500/87300 = 3.65:1

2) Inventory turnover = 821200/185950 = 4.42 Times

3) Account receivable turnover = 1401100/94000 = 14.91 Times

4) Earning per share = 409700/52220 = 7.85 per share

5) Profit margin = 409700/1401100 = 29.24%

6) Return on assets = 409700/489900 = 83.63%