Question

BALANCE SHEET ANALYSIS

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

Total assets turnover: 1.4x
Days sales outstanding: 31.5 daysa
Inventory turnover ratio: 7x
Fixed assets turnover: 3x
Current ratio: 2.2x
Gross profit margin on sales: (Sales - Cost of goods sold)/Sales = 15%
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	56,250
Inventories			Common stock
Fixed assets			Retained earnings	112,500
Total assets	$375,000		Total liabilities and equity	$
Sales	$		Cost of goods sold	$

Answer 1

Asset Turnover ratio = Sales / Assets

1.4 = Sales / $ 375,000

Sales = $ 375,000 * 1.4

= $ 525,000

Sales = $ 525,000

Fixed Asset turnover Ratio = Sales / Fixed Assets

3 = $525000 / Fixed Assets

Fixed Assets = $525,000 /3

= $ 175,000

Fixed Assets = $ 175,000

Gross Profit margin = Sales - COGS / Sales

0.15 = $ 525,000 - CoGS / $ 525,000

$ 525,000 - COGS = $525,000 *0.15

=$ 78,750

COGS = $ 525,000 - $ 78,750

= $ 446,250

Inventory Turnover ratio = COst of Goods sold / Inventory

7 = $ 446,250 / Inventory

Inventory = $ 446,250 / 7

= $ 63,750

Inventory = $ 63,750

Current ratio = Current Assets / Current liabilities

= Total Assets - Fixed Assets / Current liabilities

2.2 = $375,000 - $175,000 / Current liabilities

2.2 = $ 200,000 / Current Liabilities

Current liabilities = $ 200,000 /2.2

= 90909

Days sales OS ratio = Account Receivable / { credit sales / No. of days ]

31.5 = A ccount Receivables / [$ 525,000 /365 ]

Account Receivable = $525,000/365 * 31.5

= $ 45308

Cash = Total Assets - Fixed Assets - Inventory - Account Receivable

= $ 375,000 - $ 175,000 - $63,750 - $ 45,308

= $ 90942

Cash = $ 90,942

Common Stock = Total equity & Liabilities - Current Liabilities - Long term debt - retained earnings

= $ 375,000 - 90,909 - $56,250 - $ 112,500

Common stock = 115341

Balance sheet:

Sales = $525,000

COGS = $446,250