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Redard Corporation Comparative Balance Sheets June 30, 2013 and June 30 2014 Assets 2013 2014 Cash...

Redard Corporation Comparative Balance Sheets June 30, 2013 and June 30 2014 Assets 2013 2014 Cash 50,000 164,800 Accounts Receivable 230,000 195,200 Inventory 420,000 320,000 Prepaid Expenses 6,000 5,000 Furniture 144,000 148,000 Accumulated Depr - Furniture (24,000) (42,000) Total Assets 826,000 791,000 Liabilities & Stockholder’s Equity Accounts Payable 200,400 143,400 Income tax payable 7,400 4,400 Notes Payable (Long term) 20,000 40,000 Bond Payable 200,000 100,000 Common Stock $10 par value 200,000 240,000 Additional paid in capital 121,440 181,440 Retained Earnings 76,760 81,760 Total Liabilities & S/E 826,000 791,000 Redard Corporation Income Statement June 30, 2014 Sales 1,609,000 Cost of Goods Sold 1,127,800 Gross Profit 481,200 Operating Expenses 349,400 Operating Income 131,800 Gain on sale of furniture 7,000 Interest expense 23,200 Income before income taxes 115,600 Income tax expense 4,600 Net Income 111,000 Additional information: 1. Paid dividends of $6,000 2. Market price – $75.00 Find the following ratios for 2014: 1. Current Ratio 2. Quick Ratio 3. Accounts Receivable Turnover 4. Days to Collect 5. Inventory Turnover 6. Days on hand 7. Payable Turnover 8. Days to pay 9. Debt to Equity Ratio 10. Number of times interest Earned 11. Profit Margin 12. Assets Turnover 13. Return on Assets 14. Return on Equity 15. Earnings per Share 16. Price/Earnings Ratio 17. Dividend Yield

Solutions

Expert Solution

Answer 1.

Current Assets = Cash + Accounts Receivable + Inventory + Prepaid Expenses
Current Assets = $164,800 + $195,200 + $320,000 + $5,000
Current Assets = $685,000

Current Liabilities = Accounts Payable + Income Tax Payable
Current Liabilities = $143,400 + $4,400
Current Liabilities = $147,800

Current Ratio = Current Assets / Current Liabilities
Current Ratio = $685,000 / $147,800
Current Ratio = 4.63

Answer 2.

Quick Assets = Cash + Accounts Receivable
Quick Assets = $164,800 + $195,200
Quick Assets = $360,000

Quick Ratio = Quick Assets / Current Liabilities
Quick Ratio = $360,000 / $195,200
Quick Ratio = 1.84

Answer 3.

Average Accounts Receivable = ($230,000 + $195,200) / 2
Average Accounts Receivable = $212,600

Accounts Receivable Turnover = Sales / Average Accounts Receivable
Accounts Receivable Turnover = $1,609,000 / $212,600
Accounts Receivable Turnover = 7.57 times

Answer 4.

Days to Collect = 365 / Accounts Receivable Turnover
Days to Collect = 365 / 7.57
Days to Collect = 48.22 days

Answer 5.

Average Inventory = ($420,000 + $320,000) / 2
Average Inventory = $370,000

Inventory Turnover = Cost of Goods Sold / Average Inventory
Inventory Turnover = $1,127,800 / $370,000
Inventory Turnover = 3.05 times

Answer 6.

Days on Hand = 365 / Inventory Turnover
Days on Hand = 365 / 3.05
Days on Hand = 119.67 days

ekkarill92 answered 9 months ago
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