Question

Complete the balance sheet and sales information using the following financial data: Total assets turnover: 1.4x Days sales outstanding: 36.5 daysa Inventory turnover ratio: 4x Fixed assets turnover: 3x Current ratio: 1.9x Gross profit margin on sales: (Sales - Cost of goods sold)/Sales = 15% aCalculation is based on a 365-day year. Do not round intermediate calculations. Round your answer to the nearest cent. Balance Sheet Cash $ Current liabilities $ Accounts receivable Long-term debt 50,000 Inventories Common stock Fixed assets Retained earnings 62,500 Total assets $250,000 Total liabilities and equity $ Sales $ Cost of goods sold $

Answer 1

Total assets turnover = Sales / Total assets

or, 1.4 = Sales / $250,000

or, Sales = $250,000 x 1.4 = $350,000.00

Days sales outstanding = (Accounts receivables / Sales) x 365 days

or, 36.5 = (Accounts receivables / $350,000) x 365

or, Accounts receivables = $350,000 / 10 = $35,000.00

Inventory turnover ratio = Sales / Inventory

or, 4 = $350,000 / Inventory

or, Inventory = $350,000 / 4 = $87,500.00

Fixed assets turnover = Sales / Fixed assets

or, 3 = $350,000 / Fixed assets

or, Fixed assets = $350,000 / 3 = $116,666.67

Current assets = Total assets - Fixed assets = $250,000 - $116,666.67 = $133,333.33

Current ratio = Current assets / Current liabilities

or, 1.9 = $133,333.33 / Current liabilities

or, Current liabilities = $133,333.33 / 9 = $70,175.44

Cash = Current assets - Inventory - Accounts receivables = $133,333.33 - $87,500.00 - $35,000.00 = $10,833.33

Total liabilities and equity = Total assets = $250,000

Common stock = Total liabilities and equity - Current liabilities - long term debt - Retained earnings = $250,000 - $70,175.44 - $50,000 - $62,500 = $67,324.56

Gross profit margin = (Sales - Cost of goods sold) / Sales

or, 0.15 = ($350,000 - COGS) / $350,000

or, $350,000 - COGS = $52,500

or, COGS = $297,500