Question

Problem 5 –  

Using the data provided complete the following projected Balance Sheet for Mumford Inc. as of and for the year ended December 31, 2020. Credit (and total) sales were $2,100,000. (Type in your values)) The long term debt is all interest bearing. The total stockholders’ equity is a combination of issued common stock and retained earnings.                    Problem 5 is continued on the next page.

Total asset turnover                       2.4 times
Cash to total assets                            2%
Accounts receivable turnover        8.0 times
Inventory turnover                          10.0 times
Current ratio                                       2.0 / 1.0
Debt to total assets                            61%                 


Assets                                                                    Liabilities

Cash                                                                       Current Debt

Accounts Receivable                                              Long Term Debt

Inventory                                                                 Total Debt

Total Current Assets
                                                                       Stockholders’ Equity

Fixed Assets (net of depr)               Total Stockholders’ Equity

TOTAL ASSETS                                                          TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY                                                       

Problem 5 continued –  

Mumford Inc. is using a combination of debt and equity in its capital structure. Identify two specific pros and two specific cons of each form of capital (interest bearing debt and issued common stock) and reflect upon (briefly discuss) what makes the item you identified either a pro or a con. The remaining space on this page should be plenty of room for an effective answer.

Answer 1

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