QUESTION 4 Given the following information from the current financial statements
ID: 2595331 • Letter: Q
Question
QUESTION 4 Given the following information from the current financial statements of Arbonne Corp, calculate the ratios listed below the financial statements and fill in the chart on the next page. Round to two decimal places, where appropriate. Arbonne Corp Balance Sheet December 31. 2015 Arbonne Corp Income Statement Information S 38.500 121,000 58,600 Marketable securities For the year ended December 31. 2015 Sales (all on credit) o Accounts receivable (net) S 1,085,000 6,000 41.000 145.000 S410.100 Prepaid insurance Cost of goods sol Gross profit on sales Operating expenses Operating income Interest expense Income before taxes Income tax expense Net income 675.000 Merchandise inventory S 410.000 Plant Assets (net) 225,000 Total Assets $ 185.000 $91.400 3.800 136,900 178.000 Total Liabilities and Equity S410.100 10.300 Accounts payable $ 174.700 Interest payable Common shares Retained earnings 113.555 (A) Current ratio. (B) Accounts receivable turnover Assume the beginning of year accounts receivable balance was $59,500. Changes: OffExplanation / Answer
A) Current ratio = current assets/current liabilities
= (410100-145000)/(91400+3800)
= 2.78
B) Account receivable turnover = Credit sales / Average Account receivable
= 1085000/((59500+58600)/2)
= 18.37
C) Days sales uncollected = 365/Receivable turnover
= 365/18.37
= 19.87
D) Merchandise turnover = Sales / average inventory
= 1085000/((41000+50200)/2)
= 23.79
E) times Interest earned = operating income/interest earned
= 185000/10300 = 17.96
F) Return on Equity = net income/shareholders Equity
= 113555/((136900+178000+180000+128000)/2)
= 36.46%
G) Earnings per share = net income/AVG shares outstanding
= 113555/50000 = 22.71
H) Price earnings ratio = price per share / earnings per share
= 26/22.71
= 1.14
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