Selected year-end financial statements of McCord Corporation follow. (All sales
ID: 2348563 • Letter: S
Question
Selected year-end financial statements of McCord Corporation follow. (All sales were on credit; selected balance sheet amounts at December 31, 2010, were inventory, $32,400; total assets, $182,400; common stock, $90,000; and retained earnings, $31,300.McCORD CORPORATION
Income Statement
For Year Ended December 31, 2011
Sales $348,600
Cost of goods sold 229,150
Gross profit 119,450
Operating expenses 52,500
Interest expense 3,100
Income before taxes 63,850
Income taxes 15,800
Net income $48,050
McCORD CORPORATION
Balance Sheet
December 31, 2011
Assets Liabilities and Equity
Cash $9,000 Accounts payable $16,500
Short-term investments 7,400 Accrued wages payable 2,200
Accounts receivable, net 28,200 Income taxes payable 2,300
Notes receivable (trade)* 3,500 Long-term note payable, secured
Merchandise inventory 31,150 by mortgage on plant assets 62,400
Prepaid expenses 1,650 Common stock 90,000
Plant assets, net 152,300 Retained earnings 59,800
Total assets $233,200 Total liabilities and equity $233,200
* These are short-term notes receivable arising from customer (trade) sales.
(1) Current ratio ______ to________
(2) Acid-test ratio________to_________
(3) Days' sales uncollected (including note)____days
(4) Inventory turnover_____times
(5) Days' sales in inventory_____days
(6) Debt-to-equity ratio_____to____
(7) Times interest earned ____ times
(8) Profit margin ratio______ %
(9) Total asset turnover_____times
(10) Return on total assets_______ %
(11) Return on common stockholders' equity______%
Explanation / Answer
This is long 11 questions. I have answered three here, and if you break it in 4 parts i will answer rest.
a) current ratio = current asset / current liabilities
where
Current asset = Cash+ Short-term investments + Accounts receivable, net + Notes receivable (trade)* + Merchandise inventory + Prepaid expenses = 80900
Current liabilities = Accounts payable+ Accrued wages payable+ Income taxes payable
= 16500 +2200+2300= 21000
= 80900/21000
= 3.852
b) acid-test ratio = quick asset / current liabilities
where
Quick asset = Cash+ Short-term investments + Accounts receivable, net + Notes receivable (trade)* + + Prepaid expenses = 80900
= 49750 / 21000
=2.37
c) days’ sales uncollected = Inventory / Cost of sales * 365
where
Merchandise inventory =31,150
Cost of sales = 299,150
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