Problem 11 he llowring information applies to the Wills Way facility applies to

Question

Problem 11 he llowring information applies to the Wills Way facility applies to the Wills Wayside Inn, which is a 200-room lodging Current ratio Acid-test ratio Accounts receivable 1 to 1 8 to 1 - $60,000 30 percent = $100,000 rating efficiency ratio Total current liabilities Accounts receivable turnover10 times Labor costs $400,00 Assume the following 1. The accounts receivable turnover is based on charge sales only, which represents 50 percent of total sales. 2 The balances of all balance sheet accounts did not change from the beginning to the end of the year. Drtermnine each of the following 1. Quick assets. 2. Total sales. income after undistributed operating expenses. Labor cost percentage. 5. D legitimate business purposes Iftotncy percentagethat is, they are not available for sale. What is the paid occupancy percentage? are not available each day for rooms are sold. Assume two rooms 6. If total assets 000,000 at the end of the year, what is the total assets turnover?

Explanation / Answer

Wills Wayside Inn Current Ratio = Current Assets / Current Liabilities 1 = Current Assets / 100000 Current Assets = 100000 Quick Assets = Current Assets / Acid Test Ratio Quick Assets = 100000 / 0.8 Quick Assets = 125000 Accounts Receivable Turnover = Credit Sales / Accounts Receivable 10 = Credit Sales / 60000 Credit Sales = 600000 Total Sales = 600000 / 0.5 = 1200000 Operating Efficiency Ratios = Expenses / Sales 30%   = X / 1200000 X = 360000 Labour Cost Percentage = 400000 / 1200000 = 33.33% Total Assets Turnover = Sales / Total Assets Total Assets Turnover = 1200000 / 1000000 = 1.2

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