The balance sheet for Campbell Corporation follows: Required Compute the followi
ID: 2335176 • Letter: T
Question
The balance sheet for Campbell Corporation follows:
Required
Compute the following. (Round "Ratios" to 1 decimal place.)
The following data come from the financial records of Solomon Corporation for 2018:
Required
How many times was interest earned in 2018? (Round your answer to 2 decimal places.)
Selected data from Benson Company follow:
Required
Compute the accounts receivable turnover for 2018.
Compute the inventory turnover for 2018.
Compute the net margin for 2017.
(For all requirements, round your answers to 2 decimal places.)
Current assets $ 235,000 Long-term assets (net) 759,000 Total assets $ 994,000 Current liabilities $ 149,000 Long-term liabilities 454,000 Total liabilities 603,000 Common stock and retained earnings 391,000 Total liabilities and stockholders’ equity $ 994,000
Explanation / Answer
Campbell Corporation 1 Working Capital Current Assets - Current Liabilities 235,000-149,000 86,000.00 2 Current Ratio Current Assets / Current Liabilities 235,000/149,000 1.6 3 Debt to Assets Ratio Total Liabilities / Total Assets 603,000/ 994,000 0.6 60.7% 4 Debt to Equity Ratio Total Liabilities / Shareholders Equity 603,000/ 391,000 1.5 154.2% Solomon Corporation 5 Times interest earned Earnings before interest and taxes ÷ Interest expense (24,000+29,000+4,300)/4300 13.33 Benson Company 6 Accounts receivable turnover Net Credit Sales / Average Accounts Receivables Accounts Receivables (Opening) 364800 Accounts Receivables (Closing) 385700 Average Accounts Receivables (net) 375250 By using the formula of receivables turnover ratio, we get – Net Credit Sales 2007000 Average Accounts Receivables 375250 Receivables Turnover Ratio 5 times 7 Inventory turnover Cost of Goods Sold / Average Inventories Inventory (Beginning) 443000 Inventory (Ending) 484500 Average Inventories 463750 Using the inventory turnover ratio, we get – Cost of Goods Sold 1608000 Average Inventories 463750 Inventory Turnover 3.47 8 net margin for 2017 Net Profit / Net Sales * 100 net sales 20,59,000.00 Net Profit Sales 20,59,000.00 Less Total operating expenses 16,70,400.00 3,88,600.00 Using the formula of net profit margin, we get – Net Profit Margin 18.87%
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