The following information is from Harrelson Inc.\'s, financial statements. Sales

Question

The following information is from Harrelson Inc.'s, financial statements. Sales (all credit) were $22.50 million for 2013. Sales to total assets 1.50 times Total debt to total assets 50 % Current ratio 3.00 times Inventory turnover 9 times Average collection period 22 days Fixed asset turnover 5 times Complete the balance sheet: (Use a 360-day year. Do not round intermediate calculations. Input your answers in millions rounded to 2 decimal places.) $ in millions $ in millions Cash $ Current debt $ Accounts receivable Long-term debt Inventory Total current assets $ Total debt $ Fixed assets Equity Total assets $ Total debt and equity $

Explanation / Answer

1) Sales to total assets = 1.50 times
Sales = $22.50
$22.50/Total assets = 1.50
Total Assets = $22.50/1.50 = $15 million
Total Assets = $15 million

2) Total debt to total assets = 50%
Total Debt /$15 = 50%
Total Debt = 50% x $15 million = $7.5 million
Total Debt = $7.5 Million

3) Inventory turnover = 9 times
Sales/ Inventory = 9 times
$22.50/ inventory = 9
Inventory = $22.50/9 = $2.5 million

4) Average collection period = 22 days
360/ Account receivale Turnover = 22 days
Accounts receivable Turnover = 360/22 = 16.36 times
Accounts receivable turnover= Sales/ Accounts Receivables
16.36 = $22.50/ Accounts receivables
Accounts receivables = $22.50/16.36 = $1.38 million
Accounts Receivables = $1.38 Million
5) Fixed asset turnover = 5 times
Sales/Fixed asset = 5
$22.50/Fixed Asset = 5
Fixed Asset = $22.50/5 = $4.50
Fixed Assets = $4.50
6) Current assets = Total Assets - Fixed Assets
Current assets = $15 million -$4.50 million = $11.50
Current Assets = $11.50
7) Cash = Current assets - Inventory - Account receivables
Cash = $11.50 - $2.50 - $1.38 million = $7.62 million
Cash = $7.62 million
8) Current Ratio = 3 times
Current Ratio = Current Assets/Current Liabilities
3 = $11.50/ current liabilities
Current Liabilities = $11.50/3 = $3.83 million
Current Debt = $3.83 million
9) Long Term debt = Total Debt - Current Debt
Long Term Debt = $7.5 milion - $3.83 milion = $3.67 million
Long Term Debt = $3.67 million
10) Equity = Total Assets - Total Debt
Equity = $15 - $7.5 = $7.5 million
Equity = $7.5 million
Assets $ in Millions
Cash $7.62
Accounts Receivables $1.38
Inventories $2.50
Total Current Assets $11.50
Fixed Assets $ 4.50
Total Assets $15.00

Liabilities
Current Debt $3.83
Long Term Debt $ 3.67
Total Debt $7.50
Equity $7.50
Total debt and equity $15.00

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