2015 2016 Sales Revenue $920,000 $840,000 Cost of Goods Sold 575,000 545,000 Interest Expense 20,000 20,000...

	2015	2016
Sales Revenue	$920,000	$840,000
Cost of Goods Sold	575,000	545,000
Interest Expense	20,000	20,000
Income Tax Expense	27,000	30,000
Net Income	61,000	52,000
Cash Flow from Operations	65,000	55,000
Capital Expenditures	65,000	55,000
Acc Receivable (net) 31 Dec	126,000	120,000
Inventory 31 Dec	196,000	160,000
Stockholders' Equity 31 Dec	450,000	400,000
Total Assets 31 Dec	750,000	675,000

Required: Calculate the following ratios for 2016. The 2015 results are given for comparative purposes. Round answers to one (1) decimal place. Use 365 days in a year.

Question	2015	2016
Accounts Receivable Turnover	8.0	Answer
Average Collection Period	45.6 days	Answer (days)
Inventory Turnover	3.61	Answer
Times-interest-earned Ratio	4.80	Answer
Operating-cash-flow-to-capital-expenditures Ratio	1.22	Answer

Solutions

Expert Solution

Calculation of ratios for 2016

a) Accounts Receivable Turnover = Sales Revenue/Average Accounts Receivables

Average Accounts Receivable = (Opening Accts Receivable+Closing Accts. Receivable)/2

= ($126,000+$120,000)/2 = $123,000

Accounts Receivable Turnover = $840,000/$123,000 = 6.8

b) Average collection period = 365 days/Accounts Receivable Turnover

= 365 days/6.8 = 53.7 days

c) Inventory Turnover = Cost of goods sold/Average Inventory

Average Inventory = (Opening Inventory+Closing Inventory)/2

= ($196,000+$160,000)/2 = $178,000

Inventory Turnover = $545,000/$178,000 = 3.06

d) Times-interest-earned Ratio = Earning Before Interest and tax/Interest Expense

Earning before interest and tax = Net income+Interest Expense+Income tax expense

= $52,000+20,000+30,000 = $102,000

Interest Expense = $20,000

Times-interest-earned Ratio = $102,000/$20,000 = 5.10

e) Operating-cash-flow-to-capital-expenditures Ratio = Cash flow from operations/Capital expenditures

= $55,000/$55,000 = 1.0

ekkarill92 answered 9 months ago

Next > < Previous

Related Solutions

Solano Company has sales of $840,000, cost of goods sold of $540,000, other operating expenses of...

Solano Company has sales of $840,000, cost of goods sold of $540,000, other operating expenses of $70,000, average invested assets of $2,450,000, and a hurdle rate of 11 percent. Required: 1. Determine Solano’s return on investment (ROI), investment turnover, profit margin, and residual income. (Do not round your intermediate calculations. Enter your ROI and Profit Margin percentage answer to the nearest 2 decimal places, (i.e., 0.1234 should be entered as 12.34%). Round your Investment Turnover answer to 4 decimal places.)...

Assume sales are $7,990, cost of goods sold is $2,120, depreciation expense is $140, interest paid...

Assume sales are $7,990, cost of goods sold is $2,120, depreciation expense is $140, interest paid is $180, selling and general expenses are $360, dividends paid are $1,170, and the tax rate is 21 percent. What is the addition to retained earnings? Group of answer choices $2,005.80 $4,100.10 $2,930.10 $3,175.80

2013 2014 sales 2100 Cost of Goods Sold 1200 Depreciation Expense 225 Interest Expense 175 Current...

2013 2014 sales 2100 Cost of Goods Sold 1200 Depreciation Expense 225 Interest Expense 175 Current Assets 1000 1300 Total Fixed Assets 3500 4000 Accumulated Depreciation 1250 This can be determined from the information given Current Liabilities 900 975 Long-term Debt 1500 1350 Common Stock 400 This can be determined from the information given Question 1 part one) Use the information above to construct a 2014 income statement and balance sheets for both years. The average tax rate is 35%...

The following is information for Palmer Co. 2017 2016 2015 Cost of goods sold $ 563,825...

The following is information for Palmer Co. 2017 2016 2015 Cost of goods sold $ 563,825 $ 346,650 $ 311,300 Ending inventory 104,400 94,750 99,500 Use the above information to compute inventory turnover for 2017 and 2016, and its days' sales in inventory at December 31, 2017 and 2016.

sales=$10,980 cost of goods sold=$8,100 depreciation expense=$1,440 interest expense=$180 dividends paid=$270 Tax rate for the year...

sales=$10,980 cost of goods sold=$8,100 depreciation expense=$1,440 interest expense=$180 dividends paid=$270 Tax rate for the year was 35% what is the operating cash flow for the year

Dorothy Gale Adventures had annual sales of $7,162, depreciation expense of $996, cost of goods sold of $4,239, interest expense of $408, and taxes of $263.

Dorothy Gale Adventures had annual sales of $7,162, depreciation expense of $996, cost of goods sold of $4,239, interest expense of $408, and taxes of $263. Calculate the Net Income. A. $1,308 B. $967 C. $1,256 D. $864 E. $587

income statement Sales 205,000 cost of goods sold -97,000 salaries expense -24,000 depreciation expense -16,000...

income statement Sales 205,000 cost of goods sold -97,000 salaries expense -24,000 depreciation expense -16,000 interest expense -2,400 loss on equipment disposal -2,500 net income 63,100 Statement of Retained Earnings Beginning Balance - Retained Earnings 6,000 Plus - Net Income 63,100 Less - Dividends (41,500) Ending Balance - Retained Earnings 27,600 Balance sheets 2018 2019 change Assets: Cash 13,000 64,600 51,600 Accounts Receivable 25,000 19,000 (6,000) Inventory 19,000 13,000 (6,000) prepaid expenses 0 0 0 Equipment 60,000 41,000 (19,000)...

Cost of goods sold $223,110 Salaries and wages expense $55,720 Delivery expense 6,320 Sales discounts 7,320...

Cost of goods sold $223,110 Salaries and wages expense $55,720 Delivery expense 6,320 Sales discounts 7,320 Insurance expense 12,760 Sales returns and allowances 11,820 Rent expense 18,640 Sales revenue 366,400 Prepare the necessary closing entries. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No entry" for the account titles and enter 0 for the amounts.

Salaries expense $125,000 Sales revenue $580,000 Sales returns 5,000 Interest income 1,000 Utilities expense 15,000 Cost...

Salaries expense $125,000 Sales revenue $580,000 Sales returns 5,000 Interest income 1,000 Utilities expense 15,000 Cost of goods sold 275,000 Income tax expense 10,000 Rent Expense 110,000 Cash 12,000 Interest expense 4,000 Inventory (begin) 8,000 Inventory (end) 12,000 Determine: 1. Net sales $______ 2. Gross profit $______ 3. Operating expenses $______ 4. Operating income $______ 5. Pretax income (IBT) $______ 6. Net income $______ 7. Purchases $______ 8. Gross profit ratio (two decimal places) __ __. __ __% Use the following for 9 and 10 Units Cost...

BOK has sales of $500,000, Cost of Goods Sold of $140,000, administrative expenses of $20,000 depreciation...

BOK has sales of $500,000, Cost of Goods Sold of $140,000, administrative expenses of $20,000 depreciation expense of $10,000, and interest expense of $30,000. What is the net income for the firm using the following tax schedule? Taxable Income Tax Rate $ 1-50,000 10% $ 50,001-75,000 20% $ 75,001-100,000 30% $100,001-335,000 40% $335,001 + 50%

Subjects