Bennis company has the following data comparative balance sheet data. Item 2012

Question

Bennis company has the following data comparative balance sheet data.

Item 2012 2011
Cash $15260 $29650
Receivables (net) 70340 60180
Inventories 60320 49680
Plant assets (net) 199700 180000
Totals 345620 319510

Account Payables 50180 58160
Mortgage payable (15%) 100200 100200
Common stock, $10 par 139800 119900
Retained earnings 55440 41250
Totals 345620 319520

Additional info for 2012:
1- net income was $24760
2- sales on account were $410600. sales returns & allowances were $19300
3- cost of goods sold was $198100
4- the allowance for doubtful accounts was $2910 on Dec 31 2012 & $1940 on Dec 31 2011

Compute the following ratios at Dec 31 2012.
a- current
b- acid-test
c- receivables turnover
d- inventory turnover
(Round answers to 1 decimal place eg 10.5.)

a- current ratio ___ :1
b- acid test ratio ___: 1
c- receivables turnover _____ times
d- inventory turnover ____ times

Explanation / Answer

(a) Current ratio = Current assets/Current liablilities = (15260+70340+60320)/50180 = 2.9:1 (b) Acid-test ratio = (Current assets - Inventory)/Current liabilities = (15260+70340)/50180 = 1.7:1 (c) Receivables turnover = Net credit sales/Average net receivables = (410600-19300)/[(70340+60180)/2] = 391300/65260 = 6 times (d) Inventory turnover = COGS/Average inventory = 198100/[(60320+49680)/2] =198100/55000 = 3.6 times

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