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Blendy Company provides the following balance sheet and income statement for the year of 2018.                           &nb

Blendy Company provides the following balance sheet and income statement for the year of 2018.

                                                            HARVEY COMPANY

                                                          BALANCE SHEET

                                                  AS OF 31 DECEMBER, 2018

                       ASSETS                                                                                     “$”

                 Current Assets:

                Cash in hand                                                                              100,000

                Inventory                                                                                      90,000

               Debtors                                                                                        145,000

             Total current assets                                                                    3, 35,000

            Non-Current Assets:

           

            Total non-current assets                                                             2,530,000

              Total Assets                                                                                  2,865,000

                 LIABILITIES

           Current Liabilities:

         Total Current liabilities                                                                     5,22,000

          Non-Current Liabilities:

          Long term loan                                                                                 10,00,000

       Total Liabilities                                                                                  15,22,000

        OWNER’S EQUITY:

         Paid up capital                                                                                   740,000

         Retained Earning                                                                               543,000

        Share premium                                                                                    60,000

        Total                                                                                                   1,343,000

        Total Liabilities & Equity                                                                 2,865,000

Net Sales

$ 900,000

Cost of goods sold

(550,000)

Gross profit

350,000

Operating Expenses

(90,000)

Earning after tax

130,000

Required:

a. Calculate the following ratios:

(i) Account receivables turnover ratio in days

(ii) Inventory turnover ratio in days.

(iii) Fixed assets turnover.

(iv) Total assets turnover ratio.

(v) Return on Equity

Note: Assume 360 days in a year

b. Assuming that the industrial average for collection 150 days and fixed asset turnover is 40%,

Evaluate the performance of the BLENDY COMPANY based on your answer in part (a) above.

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Expert Solution

ekkarill92 answered 2 years ago
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