Question

Nineteen Measures of Solvency and Profitability The comparative financial statements of Blige Inc. are as follows. The market price of Blige Inc. common stock was $63 on December 31, 2016. Blige Inc. Comparative Retained Earnings Statement For the Years Ended December 31, 2016 and 2015 2016 2015 Retained earnings, January 1 Add net income for year $1,028,375 227,200 $873,425 178,900 $1,052,325 Total $1,255,575 Deduct dividends On preferred stock On common stock Total $7,700 16,250 $7,700 16,250 $23,950 $1,028,375 $23,950 Retained earnings, December 31 $1,231,625 Blige Inc. Comparative Income Statement For the Years Ended December 31, 2016 and 2015 2016 2015 Sales $1,404,210 $1,291,900 4,540 $1,287,360 432,510 Sales returns and allowances Sales Cost of goods sold Gross profit $1,397,220 470,120 $927,100 $327,140 270 can Selling expenses $854,850 $392,280 22n ann Adminintentis

Answer 1

1) Working capital:	2016
Total Current Assets	$1,156,160
Less: Total Current Liabilities	($361,300)
Working Capital	$794,860
2) Current Ratio:
Total Current Assets (a)	$1,156,160
Total Current Liabilities (b)	$361,300
Current Ratio (a/b)	3.2	times
3) Quick Ratio:
Cash	$265,720
Temporary investments	$402,170
Accounts receivable (net)	$248,200
Quick Assets (a)	$916,090
Total Current Liabilities (b)	$361,300
Quick Ratio (a/b)	2.54	times
4) Accounts receivable turnover:
Net credit sales (a)	$1,397,220
Average accounts receivable (b) ($248,200 + $233,600/2)	$240,900
Accounts receivable turnover (a/b)	5.8	times
5) Number of days' sales in receivables:
Number of days in the year (a)	365	days
Accounts receivable turnover (b)	5.8	times
Number of day's sales in receivable (a/b)	63	days
6) Inventory turnover:
Cost of Goods Sold (a)	$470,120
Average inventory (b) ($189,800 + $146,000 /2)	$167,900
Inventory turnover (a/b)	2.8	times
7) Number of days' sales in inventory:
Ending inventory (a)	$189,800
Cost of goods sold (b)	$470,120
Number of days in the year (c )	365	days
Number of days' sales in inventory (a/b*c)	147	days

Note: Four sub parts should be answered as per the Chegg guidelines, but i have answered the first seven sub parts so please do not give the negative rating for not answering all the sub parts because i followed Chegg guidelines