Docember 31 appear below. The company did not issue any new common slock during

Question

Docember 31 appear below. The company did not issue any new common slock during the year A total of 500,000 shares of common stock wore outstanding The interest rate on the bonds, which were sold at ther face value, was 10% The income tax rate was 40% and the dividend per share of common stock was S040 this year. The market value of the company's common stock at the and of the year was $22. Al of te company's sales are on account Comparative Balance Sheat This Year Last Year Assets Current assets s 1,120 $ 1,390 9,100 7.200 12,700 10,900 Tro 510 Accounts roceivable, net Prepaid expenses Total current assets 23,690 20,000 Property and equipment Land 10,200 10200 Buildings and equipment.ne Total property and equpment Total assets Liabilities and Stockholders' Equity 44898 39,374 54.898 49,574 78 588 69,574 Curtent labilities Accounts payable Accrued iabiites 19 200 $17.600 740 160 160 980 Notes payable, short term Total curreet iabilities Long-term labliies Bonds payable 20 340 18.500 9,100 9,100 29 440 27,600 Total labiities 500500 Common stock Additional paid-in capital 4,000 4,000 4,500 4,500 Total paid-in capital Retained eamings 44 648 37.474 49,148 41974 78,588 $69 574 Total stockholders' equity Total iabilities and stockhoidars equity Comparativa Income Statement and Reconcilaton This Year Last Year 71,720 $64,000 Sales Cost of goods sold 02

Explanation / Answer

Answer 1. Accounts Receivables Turnover = Sales Revenue / Avg. Accounts Receivables Average Accounts Receivables = ($9,100 + $7,200) / 2 Average Accounts Receivables = $8,150 Accounts Receivables Turnover = $71,720 / $8,150 Accounts Receivables Turnover = 8.80 (Approx.) Answer 2. Average Collection Period = 365 Days / Accounts Receivables Turnover Average Collection Period = 365 Days / 8.80 Average Collection Period = 41.48 days (Approx.) Answer 3. Inventory Turnover Ratio = Cost of Goods Sold / Average Inventory Average Inventory = ($12,700 + $10,900)/2 Average Inventory = $11,800 Inventory Turnover Ratio = $40,120 / $11,800 Inventory Turnover Ratio = 3.40 (Approx.) Answer 4. Average Sales Period = 365 Days / Inventory Turnover Ratio Average Sales Period = 365 Days / 3.40 Average Sales Period = 107.35 days Answer 5. Operating Cycle = Average Sales Period + Average Collection Period Operating Cycle = 107.35 days + 41.48 days Operating Cycle = 148.83 days Answer 6. Assets Turnover Ratio = Sales / Average Total Assets Average Total Assets = ($78,588 + $69,574) / 2 Average Total Assets = $74,081 Assets Turnover Ratio = $71,720 / $74,081 Assets Turnover Ratio = 0.97 (Approx.)

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