In: Finance
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 | $ |
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 |