A condensed balance sheet for Bradford Corporation prepared at the end of the ye

Question

A condensed balance sheet for Bradford Corporation prepared at the end of the year appears as follows:

Assets Liabilities & Stockholders' Equity
Cash $ 95,000 Notes payable (due in 6 months) $ 40,000
Accounts receivable 155,000 Accounts payable 110,000
Inventory 270,000 Long-term liabilities 360,000
Prepaid expenses 60,000 Capital stock, $5 par 300,000
Plant & equipment (net) 570,000 Retained earnings 430,000
Other assets 90,000


Total $ 1,240,000 Total $ 1,240,000



During the year the company earned a gross profit of $1,116,000 on sales of $2,950,000. Accounts receivable, inventory, and plant assets remained almost constant in amount throughout the year.

a. Compute the current ratio. (Round your answer to 1 decimal place.)
Current ratio
b. Compute the quick ratio. (Round your answer to 1 decimal place.)
Quick ratio
c. Compute the working capital. (Omit the "$" sign in your response.)
Working capital $

d. Compute the debt ratio.(Round your answer to the nearest whole percent. Omit the "%" sign in your response.)

Debt ratio %
e. Compute the accounts receivable turnover (all sales were on credit).
Accounts receivable turnover times
f. Compute the inventory turnover. (Round your answer to 1 decimal place.)
Inventory turnover times
g. Compute the book value per share of capital stock. (Round your answer to 2 decimal places. Omit the "$" sign in your response.)

Book value per share of capital stock $

Explanation / Answer

Current Ratio = 580,000 / 150,000 = 3.87 Quick Ratio = 250,000 / 150,000 = 1.67 Net Working Capital = 580,000 - 150,000 = 430,000. Debt Ratio = 510,000 / 1,240,000 = 0.41 or 41% Account Receivable Turnover = 2,950,000 / 155,000 = 19 Inventory Turnover = ( 2,950,000 – 1,116,000 ) / 270,000 = 6.79

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