Question

In: Finance

Complete the balance sheet and sales information using the following financial data: Total assets turnover: 1x...

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

Total assets turnover: 1x
Days sales outstanding: 41 daysa
Inventory turnover ratio: 7x
Fixed assets turnover: 3x
Current ratio: 2.2x
Gross profit margin on sales: (Sales - Cost of goods sold)/Sales = 30%
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 67,500
Total assets $225,000 Total liabilities and equity $  
Sales $   Cost of goods sold $  

Solutions

Expert Solution

Ans.

1. Total assets turnover ratio = Turnover / Total Asset

1 = Turnover / $ 225,000

Turnover = $ 225,000

2. Days sales outstanding: 41 days

Days Sales Outstanding = 365 / Debtors Turnover ratio

Debtors Turnover ratio = 365 /41 = 8.9

3. Debtors Turnover ratio = Turnover / Average Receivables

8.9 = $ 225,000 / Average Receivables

Average Receivables = $ 225,000 / 8.9 = $ 25,280.89 or $ 25,281

4. Gross profit margin on sales = 30%

Cost of goods sold = ( 1 - 30 %) = 0.7 or 70% of sales

= 225,000 * 70% = $ 157,500

5. Inventory turnover ratio = COGS / Inventory

7 = $ 157,500 / Inventory

Inventory = $ 157,500 / 7 = $ 22,500

Fixed assets turnover = Turnover / Fixed Assets

3 = $ 225,000 / Fixed Assets

Fixed Assets = $ 225,000 / 3 = $ 75,000

6.Current Asset = Total Assets - Fixed Assets

= $ 225,000 - $ 75,000 = $ 150,000

7. Current ratio = Current Assets / Current Liabilities

2.2 = $ 150,000/ Current Liabilities

Current Liabilities = $ 68,182

Cash = Current Assets - Average Receivable - Inventory

Cash = $ 150,000 - $ 25,281 - $ 22,500 = $ 102,219

8. Total assets = Total liabilities and equity = $ 225,000

Balance Sheet
Assets Amount Liabilities & Equity Amount
Cash $ 102,219.00 Current liabilities $   68,182.00
Accounts receivable $   25,281.00 Long-term debt $   56,250.00
Inventories $   22,500.00 Common stock (Bal. Fig) $   33,068.00
Fixed assets $   75,000.00 Retained earnings $   67,500.00
Total assets $ 225,000.00 Total liabilities and equity $ 225,000.00
Sales $ 225,000.00 Cost of goods sold $ 157,500.00

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