Armada Company has these comparative balance sheet data: ARMADA COMPANY Balance

Question

Armada Company has these comparative balance sheet data:

ARMADA COMPANY
Balance Sheets
December 31

2010 2009
Cash $25,000 $30,000
Receivables (net) 65,000 60,000
Inventories 60,000 50,000
Plant assets (net) 200,000
180,000

$350,000
$320,000


Accounts payable $50,000 $60,000
Mortgage payable (15%) 100,000 100,000
Common stock, $10 par 140,000 120,000
Retained earnings 60,000
40,000

$350,000
$320,000



Additional information for 2010:
1. Net income was $25,000.
2. Sales on account were $375,000. Sales returns and allowances amounted to $25,000.
3. Cost of goods sold was $198,000.
4. Net cash provided by operating activities was $48,000.
5. Capital expenditures were $25,000, and cash dividends were $18,000.


Compute the following ratios at December 31, 2010. (Round to 3 decimal places, e.g. 2.515.)

Current :1
Receivables turnover times
Average collection period days
Inventory turnover times
Days in inventory days
Cash debt coverage times
Current cash debt coverage times
Free cash flow $

Explanation / Answer

Current 3.0:1
Receivables turnover 5.60 times
Average collection period 65.179 days
Inventory turnover 3.60 times
Days in inventory 101.389 days
Cash debt coverage 0.310 times
Current cash debt coverage 0.873 times
Free cash flow $5,000

***All the number in bold are the answers.

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