Question

Balance Sheet Analysis

Complete the balance sheet and sales information in the table that follows for J. White Industries using the following financial data:

Total assets turnover: 1.8
Gross profit margin on sales: (Sales - Cost of goods sold)/Sales = 25%
Total liabilities-to-assets ratio: 40%
Quick ratio: 1.10
Days sales outstanding (based on 365-day year): 39.5 days
Inventory turnover ratio: 4.0

Do not round intermediate calculations. Round your answers to the nearest whole dollar.

Partial Income	Statement Information
Sales	$
Cost of goods sold	$

Balance Sheet

Cash	$	Accounts payable	$
Accounts receivable		Long-term debt	50,000
Inventories		Common stock
Fixed assets		Retained earnings	100,000
Total assets	$  400,000	Total liabilities and equity	$

Answer 1

Answer:

Total Assets Turnover = Sales / Total Assets
1.8 = Sales / $400,000
Sales = 1.8 * $400,000
Sales = $720,000

Gross Profit Margin = Gross Profit / Sales
0.25 = Gross Profit / $720,000
Gross Profit = 0.25 * $720,000
Gross Profit = $180,000

Gross Profit = Sales – Cost of Goods Sold
$180,000 = $720,000 – Cost of Goods Sold
Cost of Goods Sold = $720,000 - $180,000
Cost of Goods Sold = $540,000

Inventory Turnover = Cost of Goods Sold / Inventory
4 = $540,000 / Inventory
Inventory = $540,000 / 4
Inventory = $135,000

Days Sales Outstanding = 365 days * Accounts Receivable / Sales
39.5 = 365 * Accounts Receivable / $720,000
Accounts Receivable = 39.5 * $720,000 / 365
Accounts Receivable = $77,917.81

Total Liabilities to Assets Ratio = Total Liabilities / Total Assets
0.40 = Total Liabilities / $400,000
Total Liabilities = 0.40 * $400,000
Total Liabilities = $160,000

Accounts Payable = Total Liabilities – Long Term Debt
Accounts Payable = $160,000 - $50,000
Accounts Payable = $110,000

Quick Ratio = (Cash + Accounts Receivable) / Current Liabilities
1.10 = (Cash + $77,917.81) / $110,000
1.10 * $110,000 = Cash + $77,917.81
$121,000 = Cash + $77,917.81
Cash = $121,000 - $77,917.81
Cash = $43,082.19

Current Assets = Cash + Inventory + Accounts Receivable
Current Assets = $43,082.19 + $135,000 + $77,917.81
Current Assets = $256,000

Fixed Assets = Total Assets – Current Assets
Fixed Assets = $400,000 - $256,000
Fixed Assets = $144,000

Total Liabilities and Equity = Accounts Payable + Long term Debt + Common Stock + Retained Earnings
$400,000 = $110,000 + $50,000 + Common Stock + $100,000
Common Stock = $400,000 - $110,000 - $50,000 - $100,000
Common Stock = $140,000