Question

A condensed balance sheet for Bradford Corporation prepared at the end of the year appears as follows.

Assets					Liabilities & Stockholders' Equity
Cash	$	104,000			Notes payable (due in 6 months)	$	50,000
Accounts receivable		110,000			Accounts payable		81,000
Inventory		280,000			Long-term liabilities		361,000
Prepaid expenses		60,000			Capital stock, $5 par		300,000
Plant & equipment (net)		570,000			Retained earnings		422,000
Other assets		90,000
Total	$	1,214,000			Total	$	1,214,000

During the year, the company earned a gross profit of $1,116,000 on sales of $2,950,000. Accounts receivable, inventory, and plant assets remained almost constant in amount throughout the year, so year-end figures may be used rather than averages.

a. Compute the current ratio. (Round your answer to 2 decimal place.)

b. Compute the quick ratio. (Round your answer to 2 decimal place.)

c. Compute the working capital.

d. Compute the debt ratio. (Round your percentage answers to nearest whole percent. i.e. 0.1234 as 12%.)

e. Compute the accounts receivable turnover (all sales were on credit). (Round your answer to 2 decimal places.)

f. Compute the inventory turnover. (Round your answer to 2 decimal places.)

g. Compute the book value per share of capital stock. (Round your answer to 2 decimal places.)

Answer 1

a) Current ratio = 554000/131000 = 4.23:1

b) Quick ratio = 214000/131000 = 1.63:1

c) Working capital = 554000-131000 = $423000

d) Debt ratio = 492000*100/1214000 = 41%

e) Account receivable turnover = 2950000/110000 = 26.82 Times

f) Inventory turnover = 1834000/280000 = 6.55 Times

g) Book value per share = 722000/60000 = 12.03 per share