C O Not secure ezto.mheducation.comnm.px Income Statement $563,000 Service reven

Question

C O Not secure ezto.mheducation.comnm.px Income Statement $563,000 Service revenue (clinic, racing, TEAM) Sales revenue (MU watches) $701,000 Total revenues Expenses: Cost of goods sold (MU watches Operating expenses Depreciation expense Interest expense Income tax expense 80,000 305,276 60,000 30,724 63,000 539,000 Total expenses Net income $162,000 GREAT ADVENTURES, INC Balance Sheets December 31, 2020 and 2019 Increase () or Decrease (D) 2020 2019 Assets Current assets S321,736 $ 148.000 45,000 15,000 12,000 173,736 15,000 3,500 2.500 Cash 60,000 18,500 14.500 Inventory Other current assets Land Equipment Long-term assets 500.000 1100.000 75,000 (87750) 500.000 1100.000 ( 0 75,000 27750) 60.000 Less: Accumulated depreciation Total assets S 2.001.986 S 267,250 Liabilities and Stockholders Equity Current liabilities Accounts payable Interest payable Income tax payable Long-term liabilities $13,500 850 63,000 $10.000 850 43.000 3,500 20.000

Explanation / Answer

Part 1 a. Receivables turnover ratio = Sales Revenue/(Average Accounts Receivables) 701000/ (($60,000 + $45,000) / 2 13.35 times b. Average collection period = 365/Receivable turnover Ratio 365days/13.35 27.34 Days c. Inventory turnover ratio = COGS/Average Inventory 80000/(18500+15000)/2 4.78 times d. Average days in inventory 365 days /4.78 76.36 Days e. Current Ratio = Current assets/ Current liabilities 414736/77350 5.36 to 1 f. Acid Test Ratio = (Cash + A/R) /CL (321736 + 60000)/77350 4.94 to 1 g. Debt to equity ratio = Debt/ Equity (77350+597236)/(2001986-77350+597236) 26.75% h. Times interest earned ratio = EBIT/ Interest Expenses (162000+63000+30724)/30724 8.32 times

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