Company. Yon put in charge of preparing the financial statements for the XYZ lot

Question

Company. Yon put in charge of preparing the financial statements for the XYZ lottery ayour predecessor had already gathered some information before she won ran away with her investment advisor to live happily ever after. Given lete the income statemeht, balance sheet, and ratios for the information below, comp Company. (That means calculate anything that is missing.) XYZ Corporation ($000s) Cash Accounts Receivable Inventory Current Assets Accounts Payable Accruals Notes Payable Current Liabilities Long-Term Debt 250 500 1,300 Net Fixed Assets 5,000 Common Stock 500 Retained Earnings Total Liabilities & Owners' Equity Total Assets XYZ Income Statement ($000s) Sales (all credit) $21,000 - Cost of Goods Sold Gross Profit - Operating Expense 2,500 - Depreciation Expense - Interest Expense - Taxes Earnings Before Interest & Taxes Earnings Before Taxes Net Income 4 Current Ratio Quick Ratio Inventory Turnover Average Collection Period Fixed Asset Turnover Total Asset Turnover Total Debt Ratio Times Interest Earned Net Profit Margin Return on Assets Return on Equity 6.72 36 days 4.2 2.1 22.50% Cost of Goods Sold = 80% of Sales Interest on Notes Payable and Long-Term Debt : 8% Combined Tax Rate 30%

Explanation / Answer

Working Notes-

1. Total Assets Turnover = Net sales / Total Assets

2.1 = 21000 / Total Assets

Total Assets = $10,000.

2. Inventory Turnover ratio = COGS / Average Inventory

6.72 = 16800 / Average Inventory

Average Inventory = $2,500.

3. Average Collection period = Account Recievable * 365 / Sales

36 = Accounts Recievable * 365 / 21000

Accounts Recievable = $2,100.   

4. Current Ratio = Current Assets / Current Liabilties

4 = 5000 / Current Liabilities

Current Liabilities = $1,250.

XYZ Income Statement ($000s) Particular Amount Sales 21000 Less: COGS (80% of Sales) 16800 Gross Profit 4200 Less: Operating Expense 2500 Less: Depreciation 800 EBIT 900 Less: Interest (500+1300 )*8% 144 EBT 756 Less: Taxes (30%) 226.8 Net Income 529.2

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