Required information
Exercise 13-8 Liquidity analysis and interpretation LO P3
[The following information applies to the questions
displayed below.]
Simon Companyâ€s year-end balance sheets follow.
At December 31 | 2017 | 2016 | 2015 | ||||||
Assets | |||||||||
Cash | $ | 26,619 | $ | 31,115 | $ | 32,412 | |||
Accounts receivable, net | 89,000 | 62,100 | 53,200 | ||||||
Merchandise inventory | 114,500 | 83,000 | 57,000 | ||||||
Prepaid expenses | 8,572 | 8,168 | 3,601 | ||||||
Plant assets, net |
217,041 |
208,489 | 184,487 | ||||||
Total assets | $ | 455,732 | $ | 392,872 | $ | 330,700 | |||
Liabilities and Equity | |||||||||
Accounts payable | $ | 112,342 | $ | 65,731 | $ | 43,216 | |||
Long-term notes payable secured by mortgages on plant assets |
84,821 | 89,457 | 72,354 | ||||||
Common stock, $10 par value | 162,500 | 162,500 | 162,500 | ||||||
Retained earnings | 96,069 | 75,184 | 52,630 | ||||||
Total liabilities and equity | $ | 455,732 | $ | 392,872 | $ | 330,700 | |||
The companyâ€s income statements for the years ended December 31,
2017 and 2016, follow. Assume that all sales are on
credit:
For Year Ended December 31 | 2017 | 2016 | ||||||||||
Sales | $ | 592,452 | $ | 467,518 | ||||||||
Cost of goods sold | $ | 361,396 | $ | 303,887 | ||||||||
Other operating expenses | 183,660 | 118,282 | ||||||||||
Interest expense | 10,072 | 10,753 | ||||||||||
Income taxes | 7,702 | 7,013 | ||||||||||
Total costs and expenses | 562,830 | 439,935 | ||||||||||
Net income | $ | 29,622 | $ | 27,583 | ||||||||
Earnings per share | $ | 1.82 | $ | 1.70 | ||||||||
(1) Compute days' sales uncollected.
|
(2) Compute accounts receivable turnover.
|
(3) Compute inventory turnover.
|
(4) Compute days' sales in inventory.
|
Answer to Requirement 1.
Days’ Sales Uncollected = Average Accounts Receivable / Net Sales * 365
2016:
Average Accounts Receivable = ($53,200 + $62,100) / 2
Average Accounts Receivable = $57,650
Days’ Sales Uncollected = $57,650 / $467,518 * 365
Days’ Sales Uncollected = 45.01 days
2017:
Average Accounts Receivable = ($62,100 + $89,000) / 2
Average Accounts Receivable = $75,550
Days’ Sales Uncollected = $75,550 / $592,452 * 365
Days’ Sales Uncollected = 46.55 days
Answer to Requirement 2.
Accounts Receivable Turnover = Sales / Average Accounts Receivable
2016:
Accounts Receivable Turnover = $467,518 / $57,650
Accounts Receivable Turnover = 8.11 times
2017:
Accounts Receivable Turnover = $592,452 / $75,550
Accounts Receivable Turnover = 7.84 times
Answer to Requirement 3.
Inventory Turnover = Cost of Goods Sold / Average Inventory
2016:
Average Inventory = ($57,000 + $83,000) / 2
Average Inventory = $70,000
Inventory Turnover = $303,887 / $70,000
Inventory Turnover = 4.34 times
2017:
Average Inventory = ($83,000 + $114,500) / 2
Average Inventory = $98,750
Inventory Turnover = $361,396 / $98,750
Inventory Turnover = 3.66 times
Answer to Requirement 4.
Days Sales in Inventory = Average Inventory / Cost of Goods Sold * 365
2016:
Days Sales in Inventory = $70,000 / $303,887 * 365
Days Sales in Inventory = 84.08 days
2017:
Days Sales in Inventory = $98,750 / $361,396 * 365
Days Sales in Inventory = 99.73 days
Required information Exercise 13-8 Liquidity analysis and interpretation LO P3 [The following information applies to the...
Required information Exercise 13-8 Liquidity analysis and interpretation LO P3 [The following information applies to the questions displayed below.) Simon Company's year-end balance sheets follow. 2017 2016 2015 At December 31 Assets Cash Accounts receivable, net Merchandise inventory Prepaid expenses Plant assets, net Total assets Liabilities and Equity Accounts payable Long-term notes payable secured by mortgages on plant assets Common stock, $10 par value Retained earnings Total liabilities and equity $ 32,230 $ 37,673 $ 39,243 89,400 62,800 50, 100...
Required information Exercise 13-8 Liquidity analysis and interpretation LO P3 (The following information applies to the questions displayed below.) Simon Company's year-end balance sheets follow. 2017 2016 2015 At December 31 Assets Cash Accounts receivable, net Merchandise inventory Prepaid expenses Plant assets, net Total assets Liabilities and Equity Accounts payable Long-term notes payable secured by mortgages on plant assets Common stock, $10 par value Retained earnings Total liabilities and equity $ 27,733 $ 32,418 $ 32,457 89,500 63,000 52,300 114,000...
Exercise 17-8 Liquidity analysis and interpretation LO P3 [The following information applies to the questions displayed below.j Simon Company's year-end balance sheets follovw At December 31 Assets Cash Accounts receivable, net Merchandise inventory Prepaid expenses Plant assets, net Total assets 2017 $ 31,800 35,625 $37,800 50,200 54,000 5,000 278, 500 255,000 230,500 $523,000 $445,000 377,500 89,500 62,500 112,500 82,500 9,375 10,700 Liabilities and Equity Accounts payable Long-term notes payable secured by $129,900 75,250 $ 51,250 mortgages on plant assets Common...
Required information Part 2 of 4 Exercise 13-8 Liquidity analysis and interpretation LO P3 [The following information applies to the questions displayed below.] Simon Company's year-end balance sheets follow. points At December 31 Assets 2017 2015 2016 $ 33,579 $ 39,250 $ 40,076 57,400 58,000 4,453 240,871 Cash 89,000 112,000 10,813 Accounts receivable, net Merchandise inventory Prepaid expenses 63,000 83,500 10,303 eBook 318,101 289,717 Plant assets, net $ 563,493 $ 485,770 $ 400,800 Total assets Hint Liabilities and Equity $...
Exercise 13-8 Liquidity analysis and interpretation LO P3 [The following information applies to the questions displayed below Simon Company's year-end balance sheets follow Assets Cash Accounts receivable, net Nerchandise inventory Prepaid expenses Plant assets, net Total assets $25,396 $ 29,685 30,922 89,90063,000 57,000 110,500 84,000 60,000 8,1787,7923,436 200,810 190,337 164,142 $ 434,784 $374,814 $ 315,500 Liabilities and Equity Accounts payable Long-tern notes payable secured by 107,179 5 62,710 $ 41,230 mortgages on plant assets Common stock, $10 par value 80,922...
Exercise 17-8 Liquidity analysis and interpretation LO P3 [The following information applies to the questions displayed below.] Simon Company’s year-end balance sheets follow. The company’s income statements for the years ended December 31, 2017 and 2016, follow. Assume that all sales are on credit: Exercise 17-8 Part 1 (1) Compute days' sales uncollected. Exercise 17-8 Part 2 (2) Compute accounts receivable turnover. Exercise 17-8 Part 3 (3) Compute inventory turnover. Exercise 17-8 Part 4 (4) Compute days' sales in inventory....
Simon Company’s year-end balance sheets follow. At December 31 2017 2016 2015 Assets Cash $ 27,904 $ 32,617 $ 34,676 Accounts receivable, net 89,700 62,600 59,700 Merchandise inventory 113,000 83,000 54,000 Prepaid expenses 8,986 8,562 3,853 Plant assets, net 247,981 233,541 208,871 Total assets $ 487,571 $ 420,320 $ 361,100 Liabilities and Equity Accounts payable $ 117,763 $ 68,903 $ 46,235 Long-term notes payable secured by mortgages on plant assets 88,913 93,773 77,409 Common stock, $10 par value 162,500 162,500...
Required information [The following information applies to the questions displayed below.] Simon Company's year-end balance sheets follow. Current Yr 1 Yr Ago 2 Yrs Ago At December 31 Assets Cash Accounts receivable, net Merchandise inventory Prepaid expenses Plant assets, net Total assets Liabilities and Equity Accounts payable Long-term notes payable secured by mortgages on plant assets Common stock, $10 par value Retained earnings Total liabilities and equity $ 37,196 89,500 114,000 11,978 359,398 $ 612,072 $ 43,478 $ 43,531 62,100...
Requirea information [The following information applies to the questions displayed below.] Simon Company's year-end balance sheets follow. 2017 2016 2015 At December 31 Assets Cash Accounts receivable, net Merchandise inventory Prepaid expenses Plant assets, net Total assets Liabilities and Equity Accounts payable Long-term notes payable secured by mortgages on plant assets Common stock, sie par value Retained earnings Total liabilities and equity 33,377 $ 39,014 $ 40,234 89,208 62, 600 5 9,200 112,080 84,000 51,000 10,748 1 0, 241 4,470...
Make sure the steps are clear please 4 Check ny w Required information Exercise 13-8 Liquidity analysis and interpretation LO P3 (The following information applies to the questions displayed below] Simon Company's year-end balance sheets follow. Part 1 of 4 714 points Cash Accounts receivable, net Merchandise inventory Prepaid expensers Plant assets, net Total assets 34,644 40,496 42,184 89,200 62,800 50,600 112,500 84,000 5,000 10,630 345,624 313,389 278,929 $593,125 $ 511,315 $430,400 11,157 Hint Liabilities and Equity Accounts payable Long-term...