In: Finance
Complete the balance sheet and sales information using the
following financial data:
Total assets turnover: 1.2x
Days sales outstanding: 41.5 daysa
Inventory turnover ratio: 7x
Fixed assets turnover: 3x
Current ratio: 1.5x
Gross profit margin on sales: (Sales - Cost of goods sold)/Sales =
35%
aCalculation is based on a 365-day year. Do not round
intermediate calculations. Round your answers to the nearest
cent.
Balance Sheet | ||||
Cash | $ | Current liabilities | $ | |
Accounts receivable | Long-term debt | 30,000 | ||
Inventories | Common stock | |||
Fixed assets | Retained earnings | 50,000 | ||
Total assets | $200,000 | Total liabilities and equity | $ | |
Sales | $ | Cost of goods sold | $ |
First we will calculate sales as per below:
Total assets turnover = Sales / Total assets
1.2 = Sales / $200000
Sales = $200000 * 1.2 = $240000
Next, we will calculate cost of goods sold as below:
Gross profit margin in sales = 35% or 0.35 * Sales
So, Cost of goods sold = (1 - 0.35) * sales
Cost of goods sold = 0.65 * $240000 = $156000
Next we will calculate fixed assets as below:
Fixed assets turnover = Sales / fixed assets
3 = $240000 / Fixed assets
Fixed assets = $240000 / 3 = $80000
Next we will calculate current assets as below:
Total assets = Fixed assets + Current assets
$200000 = $80000 + Current assets
Current assets = $200000 - $80000 = $120000
Next we will calculate current liabilities as below:
Current ratio = Current assets / current liabilities
1.5 = $120000 / Current liabilities
Current liabilities = $120000 / 1.5 = $80000
Next we will calculate accounts receivable as below:
Days' sales outstanding = 365 / Accounts receivable turnover ratio
41.5 = 365 / Accounts receivable turnover ratio
Accounts receivable ratio = 365 / 41.5
Accounts receivables turnover ratio = 8.80
Accounts receivable turnover ratio = Sales / Accounts receivables
8.795 = $240000 / Accounts revceivables
Accounts receivables = $240000 / 8.8 = $27273
Next we will calculate inventory as below:
Inventory turnover ratio = Sales / Inventory
7 = $240000 / Inventory
Inventory = $240000 / 7 = $34286
Next we will calculate cash as below:
Current assets = Cash + inventory + accounts receivable
$120000 = Cash + $34286 + $27273
Cash = $120000 - $34286 - $27273 = $58441
Next we will calculate total liabilities & equity as below:
Total liabilities & equity = Total assets
Total liabilities & equity = $200000
Next we will calculate common stock as below:
Total liabilities & equity = Current liabilities + Long trrm debt + Common stock + Retained earnings
$200000 = $80000 + $30000 + Common stock + $50000
$200000 = $160000 + Common stock
Common stock = $200000 - $160000 = $40000