Question

The balance sheet for Bryan Corporation is given below. Sales for the year were $3,090,000, with 75 percent of sales sold on credit.

BRYAN CORPORATION Balance Sheet Dec. 31, 20XX
Assets			Liabilities and Equity
Cash		$60,000	Accounts payable		$245,000
Accounts receivable		290,000	Accrued taxes		55,000
Inventory		375,000	Bonds payable (long term)		200,000
Plant and equipment		435,000	Common stock		330,000
			Retained earnings		330,000
Total assets		$1,160,000	Total liabilities and equity		$1,160,000

Compute the following ratios: (Use 365 days in a year. Do not round intermediate calculation. Round the final answers to 2 decimal places.)

a.	Current ratio	___x
b.	Quick ratio	____ x
c.	Debt-to-total-assets ratio	____%
d.	Asset turnover	_____x
e.	Average collection period	____days

Answer 1

a)	Current Ratio = Current Assets / Current Liabilities
	= $725000/300000
	=2.42 times
b)	Quick Ratio = Quick Assets / Current Liabilities
	= $350000/300000
	=1.17 times
c)	Debt To Asset Ratio = Total Debt / Total Assets
	= $500000/1160000
	=43.1%
d)	Assets Turnover Ratio = Sales / average Assets
	= $3090000/1160000
	=2.66 times
e)	Account Receivables Turnover Ratio = Sales / average Account Receivables
	= $3090000/290000
	=10.66 times
	Average Collection Period = 365/ Account Receivables turnover ratio
	= 365 days /10.655
	=34.26 days