Question

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Markus Company’s common stock sold for $3.25 per share at the end of this year. The company paid a common stock dividend of $0.65 per share this year. It also provided the following data excerpts from this year’s financial statements:     

	Ending Balance		Beginning Balance
Cash	$	39,000	$	35,200
Accounts receivable	$	72,000	$	56,200
Inventory	$	61,900	$	72,000
Current assets	$	172,900	$	163,400
Total assets	$	531,000	$	550,400
Current liabilities	$	69,000	$	60,000
Total liabilities	$	156,000	$	140,400
Common stock, $1 par value	$	132,000	$	132,000
Total stockholders’ equity	$	375,000	$	410,000
Total liabilities and stockholders’ equity	$	531,000	$	550,400

     

	This Year
Sales (all on account)	$	850,000
Cost of goods sold	$	493,000
Gross margin	$	357,000
Net operating income	$	173,375
Interest expense	$	9,500
Net income	$	114,712

9. What is the accounts receivable turnover and the average collection period? (Use 365 days in a year. Round your intermediate and final answers to 2 decimal places.)

10. What is the inventory turnover and the average sale period? (Use 365 days in a year. Round your intermediate and final answers to 2 decimal places.)

11. What is the company’s operating cycle? (Round your intermediate and final answers to 2 decimal places.)      

12. What is the total asset turnover? (Round your answer to 2 decimal places.)      

Answer 1

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Part 9
Beginning Accounts Receivable		$     56,200
Ending Accounts Receivable		$     72,000
Average Accounts Receivable	a	$     64,100
Sales on account	b	$   850,000
Accounts Receivable Turnover	b/a	13.26
Average Collection Period	365 days/13.26	27.53	Days
Part 10
Beginning Accounts Inventory		$     72,000
Ending Accounts Inventory		$     61,900
Average Accounts Inventory	a	$     66,950
Cost of Goods Sold	b	$   493,000
Inventory Turnover	b/a	7.36
Average Sales Period	365 days/13.26	49.57	Days
Part 11
Operating Cycle		77.09	Days