Question

Markus Company's common stock sold for $2.75 per share at the end of this year. The company paid a common stock dividend of $0.55 per share this year. It also provided the following data excerpts from this year's financial statements: Ending Beginning Balance Balance Cash $ 35,000 $ 30,000 Accounts receivable $ 60,000 $ 50,000 Inventory $ 55,000 $ 60,000 Current assets $ 150,000 $ 140,000 Total assets $ 450,000 $ 460,000 Current liabilities $ 60,000 $ 40,000 Total liabilities $ 130,000 $ 120,000 Common stock, $1 par value $ 120,000 $ 120,000 Total stockholders' equity $ 320,000 $ 340,000 Total liabilities and stockholders' equity $ 450,000 $ 460,000 Sales (all on account) Cost of goods sold Gross margin Net operating income Interest expense Net Income This Year $ 700,000 $ 400,000 $ 300,000 $ 140,000 $ 8,000 $ 92,400

Answer 1

9) Account receivable turnover = 700000/55000 = 12.73

Average collection period = 365/12.73 = 28.67 days

10) Inventory turnover = 400000/57500 = 6.96

Average sale period = 365/6.96 = 52.44 days

11) Operating cycle = 28.67+52.44 = 81.11 days

12) Total assets turnover = 700000/455000 = 1.54