Blackwell Automotive’s balance sheet at the end of its most recent fiscal year s
ID: 2821009 • Letter: B
Question
Blackwell Automotive’s balance sheet at the end of its most recent fiscal year shows the following information: Flying Roos Corporation Balance Sheet as of December 31, 2014 Assets: Liabilities and Equity: Cash and marketable sec. $23,015 Accounts payable and accruals $163,257 Accounts receivable $141,258 Notes payable $21,115 Inventories $212,444 Total current liabilities $184,372 Total current assets $387,940 Long-term debt $168,022 Total liabilities $352,394 Net plant and equipment $711,256 Common stock $313,299 Goodwill and other assets $78,656 Retained earnings $512,159 Total assets $1,177,852 Total liabilities and equity $1,177,852 In addition on, it was reported that the firm had a net income of $156,042 on sales of $4,063,589. a. What are the firm’s current ratio and quick ratio? b. Calculate the firm’s days’ sales outstanding (DSO), total asset turnover ratio, and fixed asset turnover ratio. Blackwell Automotive’s balance sheet at the end of its most recent fiscal year shows the following information: Flying Roos Corporation Balance Sheet as of December 31, 2014 Assets: Liabilities and Equity: Cash and marketable sec. $23,015 Accounts payable and accruals $163,257 Accounts receivable $141,258 Notes payable $21,115 Inventories $212,444 Total current liabilities $184,372 Total current assets $387,940 Long-term debt $168,022 Total liabilities $352,394 Net plant and equipment $711,256 Common stock $313,299 Goodwill and other assets $78,656 Retained earnings $512,159 Total assets $1,177,852 Total liabilities and equity $1,177,852 In addition on, it was reported that the firm had a net income of $156,042 on sales of $4,063,589. a. What are the firm’s current ratio and quick ratio? b. Calculate the firm’s days’ sales outstanding (DSO), total asset turnover ratio, and fixed asset turnover ratio.Explanation / Answer
a.
Current ratio = Current assets / Current liabilities
Current ratio = 387940 / 184372 = 2.104116 = 2.10
.
Quick ratio = (Current assets - Inventory) / Current liabilities
Quick ratio = (387940 - 212444) / 184372 = 0.9518582 = 0.95
b.
DSO = Account receivable / (Total sales / 365 days)
DSO = 141258 / (4063589 / 365) = 12.688087 = 12.69 days
.
Total assets turnover ratio = Net sales / Total assets
Total assets turnover ratio = 4063589 /1177852 = 3.450000 = 3.45 times
.
Fixed asset turnover ratio = Net sales / Fixed asset or Plant and equipment
Fixed asset turnover ratio = 4063589 / 711256 = 5.713258 = 5.71 times
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