From the following information, compute the following analysis for 2 1) Working
ID: 2533095 • Letter: F
Question
From the following information, compute the following analysis for 2 1) Working Capital 2) Current Ratio 3) Quick Ratio 4) Return on Equity 5) Return on Assets 6) Accounts Receivable Turnover 7) Average Collection Period 8) Inventory Turnover 9) Average Days to Sell Inventory 10) Economic Value Added 2015 2013 $15,000 $18,000 $10,000 2014 Cash Accounts Receivable Notes Receivable Marketable Securities Inventory Supplies Equipment (net) Accounts Payable Notes Payable Mortgage Payable Bonds Payable Capital Sales (all credit) COGS Operating Expenses 70,000 60,000 80,000 10,000 13,000 10,000 20,000 30,000 10,000 60,000 50,000 70,000 4,000 6,000 10,000 400,000 625,000 622,000 56,000 32,000 30,000 70,000 60,000 40,000 85,000 35,000 100,000 250,000 100,000 100,000 350,000 450,000 447,000 750,000 850,000 900,000 500,000 525,000 425,000 150,000 200,000 400,000 Additional Assumptions: 1) The note payable is for 90 days. 2) There are 365 days in the year. 3) The interest rate on our loans is 8%. 4) The cost ofequity is 8%.Explanation / Answer
Current assests = Cash,A/c recv,Notes recv,Inventory,Supplies,Equipments,Marketable Securities.
Current Liabilities = Acc pay/Notes pay,Mortgage pay,Bonds pay.
CALCULATION
1.Working capital = Current Assests - Current Liabilities
(10000+80000+10000+70000+10000+622000+10000) - (30000+40000+100000+100000)
= 542000
2.Current Ratio = Current assets/Current liabilities
( 812000/270000) = 3.0074
3.Quick Ratio = Quick ratio ais calculated by dividing liquid current assests by total current liabilities,liquid current assests include Cash,Marketable Securities and Receivables
= (10000+10000+80000+10000 = 110000)
Total current liabilities = 270000
= 270000/110000 = 2.4545
5.Retun on Assests = Net income/total assests
Calculation of net income = total revenues - total expenses
= COGS - Operating expenses
= 425000-400000 = 25000
Now we can calculate return on assets = 25000/812000 = 0.0307
6.Accounts recievable turnover = Net credit Sales/Avarege accounts receivable
= 900000/80000 = 11.25
7.Avarege collection period = 365 days /Accounts receivable turnover ratio
= 365/11.25= 32.44
8. Inventory turnover = COGS/Average Inventory = 425000/70000
= 6.071
9. Avarege days to sell inventory = 365 days/Inventory turnover ratio
= 365/6.071 = 60.12 days
Dear student I have solved 80% question for you but i feel sorry because i could not calculate the 5th and 10th part.
I hope u will find these answers soon.Thankyou
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