The balance sheet for Stud Clothiers is shown next. Sales for the year were $3,4

Question

The balance sheet for Stud Clothiers is shown next. Sales for the year were $3,490,000, with 75 percent of sales sold on credit. STUD CLOTHIERS Balance Sheet 20x1 Assets Liabilities and Equity $ 38,000 Accounts payable Cash Accounts receivable Inventory Plant and equipment $ 262,000 148,000 178,000 100,000 150,000 240,000 $ 1,078,000 292,000 Accrued taxes 248,000 Bonds payable (long-term) 500,000 Common stock Paid-in capital Retained earnings $ 1,078,000 Total assets Total liabilities and equity Compute the following ratios: (Use a 360-day year. Do not round intermediate calculations. Round your answers to 2 decimal places. Input your debt-to-total assets answer as a percent rounded to 2 decimal places.) 1.41 times a. Current ratio b. Quick ratio c. Debt-to-total-assets ratio d Asset turmover e. Average collection period times times days

Explanation / Answer

b. quick ratio = (38 + 292)/(262+148) = 0.80

c. debt to total assets = 178/1,078 = 16.51%

d. asset turnover = 3,490/1,078 = 3.24

e. average collection = 360*292/3,490 = 30.12 days

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