Question

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: 1.8
Gross profit margin on sales: (Sales - Cost of goods sold)/Sales = 20%
Total liabilities-to-assets ratio: 45%
Quick ratio: 1.00
Days' sales outstanding (based on 365-day year): 36.5 days
Inventory turnover ratio: 3.75

Do not round intermediate calculations. Round your answers to the nearest whole dollar.

Partial Income Statement Information
Sales	$
Cost of goods sold

Balance Sheet
Assets				Liabilities and Equity
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	$

Answer 1

Total asset turnover = 1.8

Sales/Total assets = 1.8

Sales = 1.8*400,000 = $720,000

Cost of Goods sold = 720,000*80% = $576000

Inventory turnover ratio = Cost of goods sold/Inventory

3.75 = 576000/Inventory

Inventory = 153,600

DSO = 365*Receivables/Sales

Receivables = 36.5*720,000/365

= $72000

Total Liabilities = 400,000*45% = $180,000

Accounts payables = 180,000-50,000 = $130,000

Quick Ratio = 1

Cash = Accounts payables– Receivables

=130,000-72000

= $58,000

Partial Income Statement Information
Sales	720000
Cost of goods sold	576000
Balance Sheet
Assets				Liabilities and Equity
Cash		58000		Accounts payable	$	130000
Accounts receivable		72000		Long-term debt		50000
Inventories		153600		Common stock		120000
Fixed assets		116400		Retained earnings		100000
Total assets	$	400000		Total liabilities and equity	$	400000