Question

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: 1.3
Gross profit margin on sales: (Sales - Cost of goods sold)/Sales = 23%
Total liabilities-to-assets ratio: 55%
Quick ratio: 1.25
Days sales outstanding (based on 365-day year): 33 days
Inventory turnover ratio: 6.0

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 liabilities and equity = Total Assets = $400,000

Total liabilities = Total liabilities-to-assets ratio * Total Assets = 0.55 * $400,000 = $220,000

Total Equity = Total Assets - Total liabilities = $400,000 - $220,000 = $180,000

Common Stock = Total Equity - Retained Earnings = $180,000 - $100,000 = $80,000

Accounts Payable = Total Liabilities - Long-term debt = $220,000 - $50,000 = $170,000

Sales = Total Asset Turnover * Total Assets = 1.3 * $400,000 = $520,000

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

0.23 = ($520,000 - Cost of goods sold) / $520,000

0.23 * $520,000 = $520,000 - Cost of goods sold

$119,600 = $520,000 - Cost of goods sold

Cost of goods sold = $520,000 - $119,600 = $400,400

Inventory Turnover Ratio = Sales / Inventory

6 = $520,000 / Inventory

Inventory = $520,000 / 6 = $86,666.67

Days sales outstanding = 365 / [Sales / Accounts Receivable]

33 = 365 / [$520,000 / Accounts Receivable]

$520,000 / Accounts Receivable = 365 / 33

Accounts Receivable = $520,000 / 11.06 = $47,013.70

Quick Ratio = [Cash + Accounts Receivable] / Current Liabilities

1.25 = [Cash + $47,013.70] / $170,000

Cash + $47,013.70 = 1.25 * $170,000

Cash = $212,500 - $47,013.70 = $165,486.30

Fixed Assets = Total Assets - Cash - Accounts Receivable - Inventory

Fixed Assets = $400,000 - $165,486.30 - $47,013.70 - $86,666.67

Fixed Assets = $100,833.33

Partial Income	Statement Information
Sales	$520,000
Cost of goods sold	$400,400

Balance Sheet

Cash	$  165,486.30	Accounts payable	$  170,000
Accounts receivable	$  47,013.70	Long-term debt	$  50,000
Inventories	$  86,666.67	Common stock	$ 80,000
Fixed assets	$  100,833.33	Retained earnings	$  100,000
Total assets	$  400,000	Total liabilities and equity	$  400,000