Question

Complete the balance sheet and sales information using the following financial data:

Total assets turnover: 1.1x
Days sales outstanding: 33.5 days^a
Inventory turnover ratio: 7x
Fixed assets turnover: 3x
Current ratio: 1.9x
Gross profit margin on sales: (Sales - Cost of goods sold)/Sales = 25%
^aCalculation is based on a 365-day year. Do not round intermediate calculations. Round your answer to the nearest cent.

Cash	$		Current liabilities	$
Accounts receivable			Long-term debt	68,750
Inventories			Common stock
Fixed assets			Retained earnings	82,500
Total assets	$275,000		Total liabilities and equity	$
Sales	$		Cost of goods sold	$

Answer 1

Total assets turnover ratio	1.1
Days sales outstanding	33. 5
Inventory turnover ratio	7
Fixed assets turnover	3
Current ratio	1.9
Gross profit margin on sales	25%

1. Total assets turnover ratio = [Net Sales/Total Assets]

1.1 = [Net Sales/275000]

Net Sales = 1.1*275000 = $302500

Since there is no discount and returns Net Sales = Sales

Sales = $302500

2. Days sales outstanding = [(Accounts Receivable * No of Days in accounting period)/Total Credit Sales in accounting period]

Assuming Total Sale has been made on Credit

Accounts Receivable = [(Days sales outstanding*Total Sales in accounting period)/ No of Days in accounting period]

Accounts Receivable = [33.5*302500/365] = $27763.69

3. Inventory turnover ratio = [Cost of Goods Sold/ Inventory]

Inventory = 226875/7 = $ 32410.71

4. Gross profit margin on sales = [(Sales - Cost of goods sold)/Sales]

0.25 = [(302500- Cost of goods Sold)/320500]

Cost of goods Sold = 302500-302500*0.25 = 226875

5. Fixed assets turnover ratio = [ Net Sales/Fixed Assets] = [Sales/Fixed Assets]

Fixed Assets = 302500 /3 = $100833.33

6. Current ratio = [Current Assets / Current Liabilities]

Current Liabilities = [Current Assets/ Current Ratio]

Current Liabilities = 174166.67/1.9 = $91666.67

7. Total Assets = Total Liabilities and equity ( Balance sheet to match)

Total Liabilities and equity = $275000

8. Total Assets = Current Assets + Fixed Assets

Current Assets = Total Assets - Fixed Assets

Current Assets = 275000-100833.33 = $174166.67

9. Total Liabilities and Equity = Current Liabilities + Long Term Debt+ Common Stock+ Retained Earnings

275000 = 91666.67+68750+Common Stock+ 82500

Common Stock = $32083.33

10. Current Assets = Cash + Accounts Receivable + Inventories

Cash = Current Assets - Accounts Receivable - Inventories

Cash = 174166.67-27763.69-32410.71 = $113992.27

Cash	$113992.27		Current Liabilities	$91666.67
Accounts Receivable	$27763.69		Long Term Debt	$68750
Inventories	$32410.71		Common Stock	$32083.33
Fixed Assets	$100833.33		Retained Earnings	$82500
Total Assets	$275000		Total Liabilities and Equity	$275000
Sales	$302500		Cost of Goods Sold	$226875