Exercise 13-9 Carla Vista Co. has these comparative balance sheet data: CARLA VI
ID: 2536277 • Letter: E
Question
Exercise 13-9
Carla Vista Co. has these comparative balance sheet data:
CARLA VISTA CO.
Balance Sheets
December 31
2017
2016
$ 25,215
$ 50,430
117,670
100,860
100,860
84,050
336,200
302,580
$579,945
$537,920
$ 84,050
$ 100,860
168,100
168,100
235,340
201,720
92,455
67,240
$579,945
$537,920
Additional information for 2017:
Compute the following ratios at December 31, 2017. (Round current ratio and inventory turnover to 2 decimal places, e.g. 1.83 and all other answers to 1 decimal place, e.g. 1.8. Use 365 days for calculation.)
CARLA VISTA CO.
Balance Sheets
December 31
2017
2016
Cash$ 25,215
$ 50,430
Accounts receivable (net)117,670
100,860
Inventory100,860
84,050
Plant assets (net)336,200
302,580
$579,945
$537,920
Accounts payable$ 84,050
$ 100,860
Mortgage payable (15%)168,100
168,100
Common stock, $10 par235,340
201,720
Retained earnings92,455
67,240
$579,945
$537,920
Explanation / Answer
a) Current ratio = Current assets/Current liability
= 243745/84050
Current ratio = 2.90
b) Account receivable turnover = Net Sales/Average receivable
= 361500/109265
Account receivable turnover = 3.3 times
c) Average collection period = 365/3.3 = 110.6 days
d) Inventory turnover = Cost of goods sold/average inventory
= 213200/92455
Inventory turnover = 2.31 times
e) Days in inventory = 365/2.31 = 158.0 days
f) Free cash flow = 56400-27800-13300 = 15300
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