Question

Complete the balance sheet and sales information using the following financial data:

Total assets turnover: 1.6x
Days sales outstanding: 30.5 days^a
Inventory turnover ratio: 5x
Fixed assets turnover: 3.5x
Current ratio: 1.7x
Gross profit margin on sales: (Sales - Cost of goods sold)/Sales = 25%
^aCalculation is based on a 365-day year. Do not round intermediate calculations. Round your answer to the nearest cent.

Balance Sheet
Cash	$		Current liabilities	$
Accounts receivable			Long-term debt	75,000
Inventories			Common stock
Fixed assets			Retained earnings	90,000
Total assets	$300,000		Total liabilities and equity	$
Sales	$		Cost of goods sold	$

Answer 1

Total assets turnover = sales/total assets

1.6 = sales/$300,000

sales = $300,000*1.6 = $480,000‬

Gross profit margin = gross profit/sales

25% = gross profit/$480,000

gross profit = $480,000*25% = $120,000‬

Cost of goods sold = sales - gross profit = $480,000 - $120,000 = $360,000

Days sales outstanding = 365/accounts receivables turnover

30.5 = 365/ accounts receivables turnover

accounts receivables turnover = 365/30.5 = 11.97

accounts receivables turnover = sales/accounts receivables

11.97 = $480,000/accounts receivables

accounts receivables = $480,000/11.97 = $40,100

Inventory turnover ratio = cost of goods sold/inventory

5 = $360,000/inventory

inventory = $360,000/5 = $72,000

Fixed assets turnover = sales/fixed assets

3.5 = $480,000/fixed assets

fixed assets = $480,000/3.5 = $137,143

Total assets = Cash + accounts receivables + inventory + fixed assets

$300,000 = Cash + $40,100 + $72,000 + $137,143

$300,000 = Cash + $249,243

Cash = $300,000 - $249,243 = $50,757

Current ratio = current assets/current liabilities

current assets = Cash + accounts receivables + inventory = $50,757 + $40,100 + $72,000 = $162,857‬

1.7 = $162,857‬/current liabilities

current liabilities = $162,857/1.7 = $95,798

Total assets and Total liabilities & equity are always equal.

Total liabilities and equity = current liabilities + long-term debt + Common stock + Retained earnings

$300,000 = $95,798 + $75,000 + Common stock + $90,000

$300,000 = Common stock + $260,798‬

Common stock = $300,000 - $260,798‬ = $39,202

Balance Sheet
Cash	$50,757	Current liabilities	$95,798
Accounts receivable	$40,100	Long-term debt	$75,000
Inventories	$72,000	Common stock	$39,202
Fixed assets	$137,143	Retained earnings	$90,000
Total assets	$300,000	Total liabilities and equity	$300,000
Sales	$480,000	Cost of goods sold	$360,000

Calculations