Question
In: Finance
1.) Given the following: Current Assets $ 18,000 Accounts Receivable $ 3,000 Current Liabilities $ 16,000...
1.) Given the following:
| Current Assets | $ | 18,000 |
| Accounts Receivable | $ | 3,000 |
| Current Liabilities | $ | 16,000 |
| Inventory | $ | 2,000 |
| Net Sales | $ | 41,000 |
| Total Assets | $ | 29,000 |
| Net Income | $ | 6,000 |
Find the following (round to the nearest hundredth if needed):
| A. | Current ratio | ? | |
| B. | Acid test | ? | |
| C. | Average day's collection | ? | days |
| D. | Asset Turnover | ? | |
| E. | Profit margin on sales | ? |
2.) Complete using trend analyses for sales. Round to nearest percent and use 2014 as the base year.
| 2017 | 2016 | 2015 | 2014 | |||||
| Sales | $ 158,000 | $ 615,000 | $ 280,000 | $ 500,000 | ||||
| % | % | % | % |
3.) From the following information, could you help Bill calculate his cost of merchandise sold?
| Beginning inventory | $ | 2,500 |
| Purchases | $ | 3,000 |
| Purchase returns | $ | 400 |
| Purchase discounts | $ | 100 |
| Ending inventory | $ | 2,100 |
| Cost of Merchandise Sold | ??? |
4.) Al Flynn has gathered the following information. Could you help Al calculate his gross profit?
| Gross sales | $ 25,000 |
| Sales discounts | $ 3,000 |
| Beg inventory | $ 2,000 |
| Net purchases | $ 4,000 |
| Ending inventory | $ 2,800 |
| Operating expense | $ 1,800 |
| Gross Profit | ???? |
Solutions
Expert Solution
1) Ratios
a) Current Ratio = Current Assets/Current Liabilities
= 18000/16000
Current Ratio = 1.125
b) Acid Test Ratio = (Current Assets - Inventory) / Current
Liabilities
= (18000 - 2000)/16000
= 16000/16000
Acid Test Ratio = 1.00
c) Average Day's Collection = Accounts Receivables/ Net Sales *
365
= 3000/41000 * 365
Average Day's Collection = 26.707 days ~ 27
days
d) Asset Turnover = Net Sales / Total Assets
= 41000/29000
Asset Turnover = 1.4138 ~ 1.41
e) Profit Margin on Sales = Net Income / Total Sales
= 6000/41000
Profit Margin on Sales = 0.146341 or 14.63%
2) Trend Analysis = (Net Sales in next year / Net Sales in current year) - 1
| Year | 2014 | 2015 | 2016 | 2017 |
| Net Sales | 500,000 | 280,000 | 615,000 | 158,000 |
| Trend Analysis | -44.00% | 119.64% | -74.31% |
3) Net Purchase = Purchase - Purchase Returns - Purchase
discount
= 3000 - 400 - 100
Net Purchase = 2500
Cost of Merchandise Sold = Opening Inventory + Net Purchase -
Closing Inventory
= 2500 + 2500 - 2100
Cost of Merchandise Sold = $2,900
4) Net Sales = Gross Sales - Sales Discount
= 25000 - 3000
Net Sales = 22000
Cost of Goods Sold = Opening Inventory + Net Purchase - Closing
Inventory
= 2000 + 4000 - 2800
Cost of Goods Sold = $3,200
Gross Profit = Net Sales - Cost of Goods Sold
= 22000 - 3200
Gross Profit = $18,800
jeff jeffy answered 2 years agoRelated Solutions
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