Selected year-end financial statements of McCord Corporation follow. (All sales
ID: 2358789 • Letter: S
Question
Selected year-end financial statements of McCord Corporation follow. (All sales were on credit; selected balance sheet amounts at December 31, 2010, were inventory, $32,400; total assets, $182,400; common stock, $90,000; and retained earnings, $31,300.) McCORD CORPORATION Income Statement For Year Ended December 31, 2011 Sales $ 348,600 Cost of goods sold 229,150 Gross profit 119,450 Operating expenses 52,500 Interest expense 3,100 Income before taxes 63,850 Income taxes 15,800 Net income $ 48,050 McCORD CORPORATION Balance Sheet December 31, 2011 Assets Liabilities and Equity Cash $ 9,000 Accounts payable $ 16,500 Short-term investments 7,400 Accrued wages payable 2,200 Accounts receivable, net 28,200 Income taxes payable 2,300 Notes receivable (trade)* 3,500 Long-term note payable, secured Merchandise inventory 31,150 by mortgage on plant assets 62,400 Prepaid expenses 1,650 Common stock 90,000 Plant assets, net 152,300 Retained earnings 59,800 Total assets $ 233,200 Total liabilities and equity $ 233,200 * These are short-term notes receivable arising from customer (trade) sales. Required: Compute the following. (Use 365 days a year. Do not round intermediate calculations and round your final answers to 1 decimal place. Omit the "%" sign in your response): (1) Current ratio to (2) Acid-test ratio to (3) Days' sales uncollected days (4) Inventory turnover times (5) Days' sales in inventory days (6) Debt-to-equity ratio to (7) Times interest earned times (8) Profit margin ratio % (9) Total asset turnover times (10) Return on total assets % (11) Return on common stockholders' equity %Explanation / Answer
This is long 11 questions. I have answered three here, and if you break it in 4 parts i will answer rest.
a) current ratio = current asset / current liabilities
where
Current asset = Cash+ Short-term investments + Accounts receivable, net + Notes receivable (trade)* + Merchandise inventory + Prepaid expenses = 80900
Current liabilities = Accounts payable+ Accrued wages payable+ Income taxes payable
= 16500 +2200+2300= 21000
= 80900/21000
= 3.852
b) acid-test ratio = quick asset / current liabilities
where
Quick asset = Cash+ Short-term investments + Accounts receivable, net + Notes receivable (trade)* + + Prepaid expenses = 80900
= 49750 / 21000
=2.37
c) days’ sales uncollected = Inventory / Cost of sales * 365
where
Merchandise inventory =31,150
Cost of sales = 299,150
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