Question

In: Finance

Accounts Receivable 250,000 Accounts Payable 260,000 Capital Surplus 100,000 Cash 190,000 Common Stock 300,000 Costs 640,000...

Accounts Receivable 250,000 Accounts Payable 260,000 Capital Surplus 100,000 Cash 190,000 Common Stock 300,000 Costs 640,000 Depreciation Expense 40,000 Dividends 97,500 Net Furniture & Fixtures 200,000 Goodwill 180,000 Interest Expense 50,000 Inventory 175,000 Land 305,000 Line of Credit (used) 200,000 Long Term Loan 340,000 Retained Earnings 100,000 Sales 980,000 Tax rate 21% Shares outstanding 15,000

Find Ratios:

Current Ratio 1.34

Total Debt Ratio .615

Earnings Per Share 13.17

Payables Turnover 2.46

Book Value Per Share 33.33

Days Sales in Payables 148.37

Trying to find out if I'm on the right track.

Expert Solution

Answer:

Yes, all your ratios appear correct.

From given information, let us construct the balance sheet as follows:

Net Income = (Sales - (Costs + Depreciation + Interest expense)) * (1 - tax rate)

= (980,000 - (640,000 + 40,000 + 50,000)) * (1 - 21%) = $197,500

Current Ratio = Current asset /Current liabilities = 615000 / 460000 = 1.34

Total Debt Ratio = Total liabilities /Total assets = 800000 / 1300000 = 0.615

Earnings Per Share = Net Income / Number of shares outstanding = 197500 / 15000 = $13.17

Payable Turnover = COGS / Accounts payable = 640000 /260000 = 2.46

Book value per share = Stockholders' equity / Number of shares outstanding = 500000 / 15000 = $33.33

Days Sales in Payables = 365 / Payable Turnover = 365 / 2.46 = 148 days

Hence:

Current Ratio = 1.34

Total Debt Ratio = 0.615

Earnings Per Share = $13.17

Payable Turnover = 2.46

Book value per share = $33.33

Days Sales in Payable = 148 days

jeff jeffy answered 5 months ago

Assets Liabilities and Equity Cash $ 51,000 Accounts Payable $ 23,000 Accounts Receivable 43,000 Common Stock...

Assets Liabilities and Equity Cash $ 51,000 Accounts Payable $ 23,000 Accounts Receivable 43,000 Common Stock 84,000 Land 27,000 Retained Earnings 14,000 Total $ 121,000 Total $ 121,000 The following accounting events apply to Waddell Company's Year 2 fiscal year: Jan. 1 Acquired $46,000 cash from the issue of common stock. Feb. 1 Paid $5,100 cash in advance for a one-year lease for office space. Mar. 1 Paid a $1,900 cash dividend to the stockholders. Apr. 1 Purchased additional land...

Set up T accounts for Cash; Accounts Receivable; Supplies; Accounts Payable; Common Stock; Dividends; Professional Fees;...

Set up T accounts for Cash; Accounts Receivable; Supplies; Accounts Payable; Common Stock; Dividends; Professional Fees; and Operating Expenses. (a) In the T accounts, record the following transactions of Potter Pool Services for June, identifying each entry by number: (1) Stockholders invested $12,500 cash in the business by purchasing common stock. (2) Purchased supplies on account, $6,250. (3) Paid operating expenses, $5,500. (4) Billed clients for fees, $7,440. (5) Received cash from cash clients, $4,700. (6) Paid creditors on account,...

Accounts payable $18,500 Accounts receivable 8,000 Accumulated depreciation-equipment 4,800 Bonds payable 18,000 Cash 24,000 Common stock...

Accounts payable $18,500 Accounts receivable 8,000 Accumulated depreciation-equipment 4,800 Bonds payable 18,000 Cash 24,000 Common stock 25,000 Cost of goods sold 27,000 Depreciation expense 4,800 Dividends 5,300 Equipment 44,000 Interest expense 2,500 Patents 7,500 Retained earnings, January 1 16,000 Salaries and wages expense 5,200 Sales revenue 50,500 Supplies 4,500 Determine the profitability ratio that tells us for every dollars of sales revenue how much operating profit the firm has generated.And solve for the ratio.

You have $60,000 in cash, $40,000 in accounts receivable, $100,000 in inventory, $65,000 in accounts payable,...

You have $60,000 in cash, $40,000 in accounts receivable, $100,000 in inventory, $65,000 in accounts payable, $25,000 in accrued expenses on 12/31/2017. What was your net working capital balance on this date?

Accounts payable 2,300 Accounts Receivable 1,500 Accumulated depreciation - Equipment 4,000 Cash 2,600 Common Stock 4,800...

Accounts payable 2,300 Accounts Receivable 1,500 Accumulated depreciation - Equipment 4,000 Cash 2,600 Common Stock 4,800 Equipment 7,500 Inventory 400 Land 10,000 Land held as long term investment 8,000 Notes payable (due in 5 Years) 6,000 Patent 2,500 Retained Earnings 1/1 16,000 Short- term investments 1,000 Wages Payable 400 Required: Calculate following amounts. Show all work. Total Current Assets (in order of liquidity) Total property, plant, and equipment Total Assets Total Current liabilities Total Liabilities Total Stockholders equity Prove that...

Assume the following: Cash, $100,000; Accounts Receivable, $50,000; Accounts Payable, $50,000; Supplies, $40,000; Equipment, $100,000; Land,...

Assume the following: Cash, $100,000; Accounts Receivable, $50,000; Accounts Payable, $50,000; Supplies, $40,000; Equipment, $100,000; Land, $500,000; Bonds Payable, $1,000,000; Mortgage Payable, $400,000; Inventory, $100,000. Compute both the current and quick ratios. What conclusions can you draw from this data ?

company uses the following accounts: Cash Income Taxes Payable Accounts Receivable Capital Stock Prepaid Rent Retained...

company uses the following accounts: Cash Income Taxes Payable Accounts Receivable Capital Stock Prepaid Rent Retained Earnings Unexpired Insurance Dividends Office Supplies Income Summary Rental Equipment Rental Fees Earned Accumulated Depreciation: Salaries Expense Rental Equipment Maintenance Expense Notes Payable Utilities Expense Accounts Payable Rent Expense Interest Payable Office Supplies Expense Salaries Payable Depreciation Expense Dividends Payable Interest Expense Unearned Rental Fees Income Taxes Expense Dec. 1 Issued to John and Patty Driver 20,000 shares of capital stock in exchange for...

Accounts Payable 420 Accounts Receivable 3,200 Capital Stock 240 Cash 100 Cost of Goods Sold 600...

Accounts Payable 420 Accounts Receivable 3,200 Capital Stock 240 Cash 100 Cost of Goods Sold 600 Inventory 380 Long-term Debt 4,640 Net Income 280 Property, Plant, and Equipment (net) 1,400 Retained Earnings (220) Sales 3,000 Note: The retained earnings amount reported is as of the END of the year (after the closing entries have been made). Compute AVERAGE COLLECTION PERIOD (also called NUMBER OF DAYS’ SALES IN ACCOUNTS RECEIVABLE). Note: If you need to compute the average balance for any...

accounts payable $10,600 accounts receivable $11,100 accumulated depreciation $24,000 advertising expense $19,600 cash $46,500 common stock...

accounts payable $10,600 accounts receivable $11,100 accumulated depreciation $24,000 advertising expense $19,600 cash $46,500 common stock $30,000 cost of goods sold 355,500 dividends 5,000 depreciation expense 9,000 equipment 175,000 income tax expense 19,875 income tax payable - insurance expense 4,500 interest expense 3,600 interest revenue 2,500 inventory 29,000 notes payable (due in 9 months) 15,000 prepaid insurance 3,625 rent expense 24,000 retained earnings (beg. bal) 91,000 salaries expense -gen/admin 20,000 salaries expense-selling 34,000 sales revenue 605,100 utilities expense 18,000 What...

Cash $6,500 Accumulated Depreciation—Equipment $1,400 Accounts Receivable 3,800 Accounts Payable 2,900 Inventory 1,700 * Common Stock...

Cash $6,500 Accumulated Depreciation—Equipment $1,400 Accounts Receivable 3,800 Accounts Payable 2,900 Inventory 1,700 * Common Stock 22,000 Equipment 20,200 Retained Earnings 5,900 $32,200 $32,200 *(3,400 x $0.50) The following transactions occurred during December. Dec. 3 Purchased 4,500 units of inventory on account at a cost of $0.70 per unit. 5 Sold 4,900 units of inventory on account for $0.92 per unit. (Blue sold 3,400 of the $0.50 units and 1,500 of the $0.70.) 7 Granted the December 5 customer $276...