Question

Sunland Company has these comparative balance sheet data: SUNLAND COMPANY Balance Sheets December 31 2022 2021...

Sunland Company has these comparative balance sheet data:

SUNLAND COMPANY
Balance Sheets
December 31

2022

2021

Cash

$ 33,345

$ 66,690

Accounts receivable (net)

155,610

133,380

Inventory

133,380

111,150

Plant assets (net)

444,600

400,140

$766,935

$711,360

Accounts payable

$ 111,150

$ 133,380

Mortgage payable (15%)

222,300

222,300

Common stock, $10 par

311,220

266,760

Retained earnings

122,265

88,920

$766,935

$711,360


Additional information for 2022:

1. Net income was $31,000.
2. Sales on account were $380,200. Sales returns and allowances amounted to $27,700.
3. Cost of goods sold was $206,700.
4. Net cash provided by operating activities was $57,100.
5. Capital expenditures were $26,600, and cash dividends were $17,500.


Compute the following ratios at December 31, 2022. (Round current ratio and inventory turnover to 2 decimal places, e.g. 1.83 and all other answers to 1 decimal place, e.g. 1.8. Use 365 days for calculation.)

(a) Current ratio.

enter current ratio rounded to 2 decimal places

 :1
(b) Accounts receivable turnover.

enter accounts receivable turnover in times rounded to 1 decimal place

 times
(c) Average collection period.

enter average collection period in days rounded to 1 decimal place

 days
(d) Inventory turnover.

enter inventory turnover in times rounded to 2 decimal places

 times
(e) Days in inventory.

enter days in inventory rounded to 1 decimal place

 days
(f) Free cash flow.

$enter free cash flow in dollars rounded to 1 decimal place
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Answer #1

Compute the following ratios at December 31, 2022. (Round current ratio and inventory turnover to 2 decimal places, e.g. 1.83 and all other answers to 1 decimal place, e.g. 1.8. Use 365 days for calculation.)

(a) Current ratio. 322335/111150 = 2.90 :1
(b) Accounts receivable turnover. (380200-27700)/144495 = 2.4 times
(c) Average collection period. 365/2.4 = 152.1 days days
(d) Inventory turnover. 206700/122265 = 1.69 times
(e) Days in inventory. 365/1.69 = 215.0 days
(f) Free cash flow. 57100-26600-17500 = 13000
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