Question

The balance sheet for Stud Clothiers is shown next. Sales for the year were $3,490,000, with 75 percent of sales sold on credit.

STUD CLOTHIERS Balance Sheet 20X1
Assets			Liabilities and Equity
Cash	$	38,000	Accounts payable	$	262,000
Accounts receivable		292,000	Accrued taxes		148,000
Inventory		248,000	Bonds payable (long-term)		178,000
Plant and equipment		500,000	Common stock		100,000
			Paid-in capital		150,000
			Retained earnings		240,000
Total assets	$	1,078,000	Total liabilities and equity	$	1,078,000

Compute the following ratios: (Use a 360-day year. Do not round intermediate calculations. Round your answers to 2 decimal places. Input your debt-to-total assets answer as a percent rounded to 2 decimal places.)

CURRENT RATIO

QUICK RATIO

DEBT TO TOTAL ASSETS RATIO

ASSET TURNOVER

AVERAGE COLLECTION PERIOD

Answer 1

= ( $ 38000 + $ 292000 + $ 248000 ) / ( $ 262000 + $ 148000)

= $ 578000 / $ 410000

= 1.40

• Current Assets = Cash + Accounts Receivables + Inventory = $ 578000
• Current Liabilities = Accounts Payable + Accrued Taxes = $ 410000

= ( $ 578000 - $ 248000 ) / $ 410000

= $ 330000 / $ 410000

= 0.80

= $ 178000 / ( $ 578000 + $ 500000 )

= $ 178000 / $ 1078000

= 0.17

• Debt = Bonds Payable long term = $ 178000
• Total Assets = Current Liabilities + Fixed Assets ( Plant and Equipment) = $ 1078000

= $ 3490000 / $ 1078000

= 3.24

= ( 360 * $ 292000) / ( 75 % of $ 3490000)

= 40.16 days

• Credit Sales is 75% of Sales