Question

13. Problem 4.22 Click here to read the eBook: Ratio Analysis Click here to read the eBook: Liquidity Ratios Click here to read the eBook: Asset Management Ratios Click here to read the eBook: Profitability Ratios Problem Walk-Through BALANCE SHEET ANALYSIS Complete the balance sheet and sales information using the following financial data: Total assets turnover: 1.2x Days sales outstanding: 30.5 daysa Inventory turnover ratio: 4x Fixed assets turnover: 3.5x Current ratio: 2.1x Gross profit margin on sales: (Sales - Cost of goods sold)/Sales = 25% Calculation 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 40,000 Inventories Common stock Fixed assets 60,000 Retained earnings Total liabilities and equity Total assets $200,000 Sales Cost of goods sold Grade It Now Save & Continue Continue without saving

Answer 1

Total asset turnover = Sales / Total assets
1.2 = Sales / 200000
Sales = 1.2 * 200000	240000
Days sales outstanding = ( Accounts receivables / Sales ) * Days in a year
30.5 = ( Accounts receivables / 240000 ) * 365
Accounts receivables = 30.5 * 240000 / 365	20055
Gross profit margin on sales = ( Sales - Cost of goods sold ) / Sales
25% = ( 240000 - Cost of goods sold ) / 240000
25% * 240000 = 240000 - Cost of goods sold
60000 = 240000 - Cost of goods sold
Cost of goods sold = 240000 - 60000	180000
Inventory turnover ratio = Cost of goods sold / Inventories
4 = 180000 / Inventories
Inventories = 180000 / 4	45000
Fixed asset turnover = Sales / Fixed assets
3.5 = 240000 / Fixed assets
Fixed assets = 240000 / 3.5	68571
Cash = Total assets - Accounts receivables - Inventories - Fixed assets = 200000 - 20055 -45000 - 68571	66374
Total liabilities and equity = Total assets	200000
Current assets = Cash + Accounts receivables + Inventories = 66374 + 20055 + 45000	131429
Current ratio = Current assets / Current liabilities
2.1 = 131429 / Current liabilities
Current liabilities = 131429 / 2.1	62585
Common stock = Total liabilities and equity - Current liabilities - Long term debt - Retained earnings = 200000 - 62585 - 40000 - 60000	37415

Cash	66374		Current liabilities	62585
Accounts receivables	20055		Long-term debt	40000
Inventories	45000		Common stock	37415
Fixed assets	68571		Retained earnings	60000
Total assets	200000		Total liabilities and equity	200000
Sales	240000		Cost of goods sold	180000