Account Current year Prior year Net sales (all credit) $520,125 $499,500 Cost of
ID: 2467198 • Letter: A
Question
Account
Current year
Prior year
Net sales (all credit)
$520,125
$499,500
Cost of goods sold
$375,960
$353,600
Gross profit
$144,165
$145,900
Income from operations
$ 95,500
$ 79,900
Interest expense
$ 23,500
$ 19,500
Net income
$ 57,600
$ 51,600
Cash
$ 30,600
$ 15,900
Accounts receivable, net
$ 33,800
$ 23,200
Inventory
$ 42,000
$ 30,300
Prepaid expenses
$ 2,000
$ 1,500
Total current assets
$ 108,400
$ 70,900
Total long-term assets
$ 62,000
$ 38,000
Total current liabilities
$ 46,000
$ 41,600
Total long-term liabilities
$ 20,000
$ 22,700
Common stock, no par,
3,000 shares, value $50/share
$ 30,000
$ 30,000
a.What is the inventory turnover for the current year?
b.What is days' sales in receivables for the current year?
c.What is the book value per share of common stock for the current year?
d.What is the price-earnings ratio for the current year?
e.What is the rate of return on total assets for the current year?
Account
Current year
Prior year
Net sales (all credit)
$520,125
$499,500
Cost of goods sold
$375,960
$353,600
Gross profit
$144,165
$145,900
Income from operations
$ 95,500
$ 79,900
Interest expense
$ 23,500
$ 19,500
Net income
$ 57,600
$ 51,600
Cash
$ 30,600
$ 15,900
Accounts receivable, net
$ 33,800
$ 23,200
Inventory
$ 42,000
$ 30,300
Prepaid expenses
$ 2,000
$ 1,500
Total current assets
$ 108,400
$ 70,900
Total long-term assets
$ 62,000
$ 38,000
Total current liabilities
$ 46,000
$ 41,600
Total long-term liabilities
$ 20,000
$ 22,700
Common stock, no par,
3,000 shares, value $50/share
$ 30,000
$ 30,000
Explanation / Answer
a. Inventory Turnover = Cost of goods sold / Average inventory = 375,960 / 36,150 = 10.4 times
b. Days sales in receivables = 365/ Receivables turnover = 365/ Sales x Average receivables = 365 / 520,125 x 28,500
= 20 days
c. Book value per share = Total assets - Total liabilities / Number of shares of common stock = (170,400 -66,000) / 3,000 = $ 34.8
d. Price earnings ratio = Market price per share / Earnings per share = 50 / 19.2 = 2.60 times
e. Rate of return on total assets = Net income / Total assets = 57,600 / 170,400 x 100 = 33.80%
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