The balance sheet and income statement shown below are for Koski Inc. Note that

Question

The balance sheet and income statement shown below are for Koski Inc. Note that the firm has no amortization charges, it does not lease any assets, none of its debt must be retired during the next 5 years, and the notes payable will be rolled over.


Balance Sheet (Millions of $)
Assets 2007
Cash and securities $1,290
Accounts receivable 9,890
Inventories 13,760
Total current assets $24,940
Net plant and equipment $18,060
Total assets $43,000
Liabilities and Equity
Accounts payable $8,170
Notes payable 6,020
Accruals 4,730
Total current liabilities $18,920
Long-term bonds $8,815
Total debt $27,735
Common stock $5,805
Retained earnings 9,460
Total common equity $15,265
Total liabilities and equity $43,000

Income Statement (Millions of $) 2007
Net sales $51,600
Operating costs except depreciation 48,246
Depreciation 903
Earnings bef interest and taxes (EBIT) $2,451
Less interest 927
Earnings before taxes (EBT) $1,524
Taxes 533
Net income $990

Other data:
Shares outstanding (millions) 500.00
Common dividends (millions of $) $346.67
Int rate on notes payable & L-T bonds 6.25%
Federal plus state income tax rate 35%
Year-end stock price $23.77



What is the firm's days sales outstanding? Assume a 365-day year for this calculation.
Answer
55.27
66.46
80.45
57.37
69.96

Explanation / Answer

current ratio = CA/CL = 24,940/18,920 = 1.32 (3sf) quick ratio = (CA-inventory)/CL = (24,940-13,760)/18,920 = 0.591 (3sf) days sales outstanding = (Avg AR/Sales)*365 = 9,890/51,600 * 365 = 70.0 (3sf) total assets turnover = Sales/Total assets = 51,600/43,000 = 1.2 inventory turnover ratio = COGS/Avg inventory = 48,246/13,760 = 3.51 (3sf) TIE = EBIT/Interest Expense = 2,451/927 = 2.64 (3sf) debt/assets ratio = Total debt/Total asset = 43,000/27,735 = 1.55 (3sf) ROA = Net income/Total asset = 990/43,000 = 0.0230 (3sf) ROE = Net income/Total equity = 990/15,265 = 0.0649 (3sf)

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