Question

Problem 3-11
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: 2.8
Gross profit margin on sales: (Sales - Cost of goods sold)/Sales = 23%
Total liabilities-to-assets ratio: 60%
Quick ratio: 0.90
Days sales outstanding (based on 365-day year): 31.5 days
Inventory turnover ratio: 5.0

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

Total Asset Turnover = Sales / Total Assets
2.80 = Sales / $400,000
Sales = $1,120,000

Gross Profit Margin = (Sales - Cost of Goods Sold) / Sales
0.23 = ($1,120,000 - Cost of Goods Sold) / $1,120,000
$257,600 = $1,120,000 - Cost of Goods Sold
Cost of Goods Sold = $862,400

Total Liabilities to Assets Ratio = Total Liabilities / Total Assets
0.60 = Total Liabilities / $400,000
Total Liabilities = $240,000

Total Liabilities = Accounts Payable + Long-term Debt
$240,000 = Accounts Payable + $50,000
Accounts Payable = $190,000

Days Sales Outstanding = 365 * Accounts Receivable / Sales
31.50 = 365 * Accounts Receivable / $1,120,000
Accounts Receivable = $96,658

Inventory Turnover Ratio = Cost of Goods Sold / Inventory
5.0 = $862,400 / Inventory
Inventory = $172,480

Quick Ratio = (Cash + Accounts Receivable) / Accounts Payable
0.90 = (Cash + $96,658) / $190,000
Cash = $74,342

Total Assets = Cash + Accounts Receivable + Inventory + Fixed Assets
$400,000 = $74,342 + $96,658 + $172,480 + Fixed Assets
Fixed Assets = $56,520

Total Liabilities and Equity = Total Assets
Total Liabilities and Equity = $400,000

Total Liabilities and Equity = Total Liabilities + Common Stock + Retained Earnings
$400,000 = $240,000 + Common Stock + $100,000
Common Stock = $60,000