Question

5)19)

Angela Adams was considering investing in a business. She used the following statement in analyzing the Tic Tock Clock Shop. Provide the following information for Angela Adams' consideration. When the ratio is less than 1, round the ratio to three decimal places; otherwise, round to one decimal place.

	Tic Tock Clock Shop
	Comparative Balance Sheet
	As of December 31, 2015 and 2014
	2015		2014
	Amount		Amount
ASSETS
Current assets:
Cash	$139,400		$133,600
Accounts receivable	86,400		87,400
Merchandise inventory	245,900		221,100
Total current assets	$471,700		$442,100
Fixed assets:
Building improvements	$74,700		$62,800
Equipment	152,200		151,800
Total fixed assets	$226,900		$214,600
TOTAL ASSETS	$698,600		$656,700
LIABILITIES
Current liabilities:
Salaries payable	$85,600		$20,300
Accounts payable	122,100		140,100
Total current liabilities	$207,700		$160,400
Long-term liabilities:
Note payable	$113,000		$158,500
Total liabilities	$320,700		$318,900
Owner's equity:
J. B. Tinker, capital	377,900		337,800
TOTAL LIABILITIES AND OWNER'S EQUITY	$698,600		$656,700

	Tic Tock Clock Shop
	Comparative Income Statement
	For Years Ended December 31, 2015 and 2014
	2015		2014
NET SALES	$820,000		$853,100
Cost of goods sold:
Merchandise inventory, January 1	$221,100		$224,500
Purchases	583,300		594,200
Merchandise available for sale	$804,400		$818,700
Merchandise inventory, December 31	245,900		221,100
Cost of goods sold	$558,500		$597,600
Gross profit on sales	$261,500		$255,500
Expenses:
Selling	$84,300		$75,900
Other	24,000		31,400
Total expenses	$108,300		$107,300
NET INCOME	$153,200		$148,200

	2015	2014
a. Working capital ratio	Select2.2:12.3:12.4:12.6:1Item 1	Select2.6:12.7:12.8:13.0:1Item 2
b. Acid-test ratio	Select1.0:11.1:11.2:11.3:1Item 3	Select1.2:11.3:11.4:11.5:1Item 4
c. Ratio of accounts receivable to net sales	Select0.104:10.105:10.106:10.107:1Item 5	Select0.102:10.103:10.104:10.105:1Item 6
d. Inventory turnover	times	times
e. Ratio of net income to net sales	%	%
f. Rate of return on investment	%	%

Answer 1