Question

Blackwell Automotive’s balance sheet at the end of its most recent fiscal year shows the following...

Blackwell Automotive’s balance sheet at the end of its most recent fiscal year shows the following information:
Flying Roos Corporation
Balance Sheet as of December 31, 2014
Assets: Liabilities and Equity:
Cash and marketable sec. $23,015 Accounts payable and accruals $163,257
Accounts receivable $141,258 Notes payable $21,115
Inventories $212,444 Total current liabilities $184,372
Total current assets $387,940 Long-term debt $168,022
Total liabilities $352,394
Net plant and equipment $711,256 Common stock $313,299
Goodwill and other assets $78,656 Retained earnings $512,159
Total assets $1,177,852 Total liabilities and equity $1,177,852
In addition on, it was reported that the firm had a net income of $156,042
on sales of $4,063,589.
a.     What are the firm’s current ratio and quick ratio?
b.     Calculate the firm’s days’ sales outstanding (DSO), total asset
turnover ratio, and fixed asset turnover ratio.
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Homework Answers

Answer #2


a.

Current ratio = Current assets / Current liabilities

Current ratio = 387940 / 184372 = 2.104116 = 2.10

.

Quick ratio = (Current assets - Inventory) / Current liabilities

Quick ratio = (387940 - 212444) / 184372 = 0.9518582 = 0.95

b.

DSO = Account receivable / (Total sales / 365 days)

DSO = 141258 / (4063589 / 365) = 12.688087 = 12.69 days

.

Total assets turnover ratio = Net sales / Total assets

Total assets turnover ratio = 4063589 /1177852 = 3.450000 = 3.45 times

.

Fixed asset turnover ratio = Net sales / Fixed asset or Plant and equipment

Fixed asset turnover ratio = 4063589 / 711256 = 5.713258 = 5.71 times

answered by: anonymous
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