Question

# Consider the following company’s balance sheet and income statement. Balance Sheet Assets Liabilities and Equity Cash...

Consider the following company’s balance sheet and income statement. Balance Sheet Assets Liabilities and Equity Cash \$ 10,000 Accounts payable \$ 31,000 Accounts receivable 72,000 Notes payable 25,000 Inventory 53,000 Total current assets 135,000 Total current liabilities 56,000 Fixed assets 81,000 Long-term debt 30,000 Equity 130,000 Total assets \$ 216,000 Total liabilities and equity \$ 216,000 Income Statement Sales (all on credit) \$ 290,000 Cost of goods sold 180,000 Gross margin 110,000 Selling and administrative expenses 43,000 Depreciation 7,000 EBIT 60,000 Interest expense 6,100 Earnings before tax 53,900 Taxes 16,170 Net income \$ 37,730 For this company, calculate the following: (Use 365 days in a year. Do not round intermediate calculations. Round your answers to 2 decimal places. (e.g., 32.16)) a. Current ratio times b. Number of days’ sales in receivables days c. Sales to total assets times d. Number of days in inventory days e. Debt-to-asset ratio % f. Cash-flow debt ratio % g. Return on assets % h. Return on equity %

 Formula Calculation Current Ratio Current asset/Current liabilities 135000/56000 = 2.41 Times Number of days’ sales in receivables days 365* Accounts receivable /Net credit sales 365* 72000/290000 90.62 Days Sales to total assets times Sales /Total asset 290000 /216000 =1.34 Times Number of days in inventory days 365*Inventory /cost of goods sold 365* 53000/180000 =107.47 days Debt-to-asset ratio Total liabilities /Total asset (56000+30000)/216000 39.81%

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