Question

current asset: 250,000

property and equipment: 1,500,000

total sales: 2,000,000

profit margin: 5%

Current ratio: 1.5 to 1

Return on members' equity: 10%

Account receivable turnover: 20 times

determine:

Total Current Liabilities

Results of operations

total members equity

long term debt

account receivable at the end of year

debt equity ratio

Answer 1

1. Total Current Liabilities

Current ratio = Curret asset / Current liability = 1.5

250,000/CL = 1.5

Current Liability = 250000/1.5 = 166666.70

2. Results of operations

Profit = 5% of total sales = 0.05 x 2,000,000 = 100,000

3. Total members equity

Return on member's equity = Net income / Total equity

0.10 = (5% of 2,000,000) / Total equity

0.10 = 100000 / Total equity

Total members equity = 1,000,000

4. Long-Term Debt

No long-term debt parameter is given in the question. All the parameters given are short-term basis only.