In: Finance
Problem 3-11
Balance Sheet Analysis
Complete the balance sheet and sales information in the table that follows for J. White Industries using the following financial data:
Total assets turnover: 2.6
Gross profit margin on sales: (Sales - Cost of goods sold)/Sales =
23%
Total liabilities-to-assets ratio: 40%
Quick ratio: 1.15
Days sales outstanding (based on 365-day year): 34.5 days
Inventory turnover ratio: 3.0
Do not round intermediate calculations. Round your answers to the nearest whole dollar.
Partial Income | Statement Information |
Sales | $ |
Cost of goods sold | $ |
Balance Sheet
Cash | $ | Accounts payable | $ |
Accounts receivable | Long-term debt | 50,000 | |
Inventories | Common stock | ||
Fixed assets | Retained earnings | 100,000 | |
Total assets | $ 400,000 | Total liabilities and equity | $ |
Total Asset Turnover = Sales / Total Assets
2.60 = Sales / $400,000
Sales = $1,040,000
Gross Profit Margin = (Sales - Cost of Goods Sold) / Sales
0.23 = ($1,040,000 - Cost of Goods Sold) / $1,040,000
Cost of Goods Sold = $800,800
Total Liabilities to Assets Ratio = Total Liabilities / Total
Assets
0.40 = Total Liabilities / $400,000
Total Liabilities = $160,000
Total Liabilities = Accounts Payable + Long-term Debt
$160,000 = Accounts Payable + $50,000
Accounts Payable = $110,000
Days Sales Outstanding = 365 * Accounts Receivable / Sales
34.50 = 365 * Accounts Receivable / $1,040,000
Accounts Receivable = $98,301
Inventory Turnover Ratio = Cost of Goods Sold / Inventory
3.0 = $800,800 / Inventory
Inventory = $266,933
Quick Ratio = (Cash + Accounts Receivable) / Accounts
Payable
1.15 = (Cash + $98,301) / $110,000
Cash = $28,199
Total Assets = Cash + Accounts Receivable + Inventory + Fixed
Assets
$400,000 = $28,199 + $98,301 + $266,933 + Fixed Assets
Fixed Assets = $6,567
Total Liabilities and Equity = Total Assets
Total Liabilities and Equity = $400,000
Total Liabilities and Equity = Total Liabilities + Common Stock
+ Retained Earnings
$400,000 = $160,000 + Common Stock + $100,000
Common Stock = $140,000