Question

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

Total assets turnover: 1.3x
Days sales outstanding: 31.5 days^a
Inventory turnover ratio: 7x
Fixed assets turnover: 3.5x
Current ratio: 2x
Gross profit margin on sales: (Sales - Cost of goods sold)/Sales = 35%
^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

Total Assets Turnover = Sales/Total Assets = 1.3
Sales = 1.3*375,000 = 487500

Fixed Assets turnover = Sales/Fixed Assets = 487500/Fixed Assets = 3.5
Fixed Assets = 487500/3.5 = 139,285.71

Gross Profit Margin on Sales = (Sales - COGS)/Sales = 35%
(487500 - COGS)/487500 = 35%
COGS = 487500 - 35%*487500 = 316875.00

Days Sales Outstanding = Receivables/(Sales/365) = 31.5
Receivables = 31.5 * 487500/365 = 42071.92

Total Liabilities and Equity = 375,000

Inventory Turnover = Cost of Goods Sold/Inventory
7 = 316875.00/Inventory
Inventory =316875.00/7= 45267.86


Current assets = Total assets - Fixed Assets = 375,000 - 139,285.71 = 235,714.29

Cash = Current Assets - Account Receivables - Inventories =235,714.29 - 42071.92 - 45267.86
= 148,374.51

Current ratio = ( Current assets - Inventories)/Current Liabilities = 2.5

( 235,714.29- 45267.86)/Current Liabilities = 2
Current Liabilities =   (235,714.29- 45267.86)/2= 95,223.22

Common Stock = Total Liabilities and Equity - Retained Earnings - Long Term debt - Current Liabilities = 375,000 - 112,500 - 56,250 - 95,223.22 = 111,026.78

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