Assets Liabilities & Stockholders\' Equity $ 91,000 Notes payable (due in 6 48,
ID: 2329147 • Letter: A
Question
Assets Liabilities & Stockholders' Equity $ 91,000 Notes payable (due in 6 48, 000 Cash months) Accounts receivable Inventory Prepaid expenses Plant & equipment (net) Other assets Total 100,000 343,000 300,000 400,000 110,000 Accounts payable 270,000 Long-term liabilities 60,000 Capital stock, $5 par 570,000 Retained earnings 90,000 $1,191,000 Total During the year, the company earned a gross profit of $1,116,000 on sales of $2,950,000. Accounts receivabi assets remained almost constant in amount throughout the year, so year-end figures may be used rather thar a. Compute the current ratio. (Round your answer to 2 decimal place.) b. Compute the quick ratio. (Round your answer to 2 decimal place.) c. Compute the working capital d Compute the debtratio (Round your percentage answers to nearest whole percent i e 0.1234 as 12% e. Compute the accounts receivable turnover (all sales were on credit). (Round your answer to 2 decimal pla f. Compute the inventory turnover. (Round your answer to 2 decimal places.) g. Compute the book value per share of capital stock. (Round your answer to 2 decimal places.) a Current ratio b Quick ratio to 1 to 1 Working capital d Debt ratio e Accounts receivable turnover f Inventory turnover g Book value per share of capital stock times timesExplanation / Answer
a.
Total current assets = Cash + Accounts receivable + Inventory + Prepaid expenses = $91,000 + $110,000 + $270,000 + $60,000 = $531,000
Total current liabilities = Notes payable + Accounts payable = $48,000 + $100,000 = $148,000
Current ratio = Total current assets / Total current liabilities = $531,000 / $148,000 = 3.59 times
b.
Quick assets = Current assets – Inventory – Prepaid expenses = $531,000 - $270,000 - $60,000 = $201,000
Quick ratio = Quick assets/Current liabilities = $201,000/$148,000 = 1.36 times
c.
Working capital = Total current assets – Total current liabilities = $531,000 - $148,000 = $383,000
d.
Long term liabilities = $343,000
Debt ratio = Long term liabilities / Total assets = $343,000/$1,191,000 = 0.2880 = 29%
e.
Account receivable turnover = Credit sales/Accounts receivable = $2,950,000 / $110,000 = 26.82 times
f.
Cost of goods sold = Sales – Gross profit = $2,950,000 - $1,116,000 = $1,834,000
Inventory turnover = Cost of goods sold/Inventory = $1,834,000/$270,000 = 6.79 times
g.
Number of shares outstanding = Capital stock/Par value per share = $300,000/$5 = 60,000 shares
Total equity = Capital stock + Retained earnings = $300,000 + $400,000 = $700,000
Book value per share = Total equity/Number of shares outstanding = $700,000/60,000 share = $11.67 per share
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