please answer all questions and showing your work would be extremely helpful Mar
ID: 2480790 • Letter: P
Question
please answer all questions and showing your work would be extremely helpful
Markus Company’s common stock sold for $6.25 per share at the end of this year. The company paid a common stock dividend of $0.75 per share this year. It also provided the following data excerpts from this year’s financial statements:
What is the accounts receivable turnover and the average collection period? (Use 365 days in a year. Round your intermediate and final answers to 2 decimal places.)
What is the inventory turnover and the average sale period? (Use 365 days in a year. Round your intermediate and final answers to 2 decimal places.)
Markus Company’s common stock sold for $6.25 per share at the end of this year. The company paid a common stock dividend of $0.75 per share this year. It also provided the following data excerpts from this year’s financial statements:
Explanation / Answer
9. Accounts Receivable turnover ratio = Credit sales/Average Receivables
Credit Sales = $1,310,000;
Average Receivables = Opening balance of Receivables + Closing balance of Receivables/2
= 76,200+110,000/2=186,200/2 = 93,100
Receivables Turnover Ratio = 1,310,000/93,100 = 14.07 times
Average Collection Period = No. of days in a year / Receivables Turnover Ratio = 365/14.07 = 25.94 days
10. Inventory Turnover Ratio = Cost of goods sold/Average Inventory
Cost of goods sold = 759,800;
Average Inventory = Opening inventory + Closing inventory/2
= 110,000+84,700/2
= 194,700/2
= 97.350
Inventory Turnover Ratio = 759,800/97,350 = 7.80 times
Average Sales Period = (Average inventory / cost of goods sold) x 365
= (97,350/759,800) x 365
= 0.1281 x 365
= 46.76 days
11. Company's Operating Cycle = Days inventory outstanding (DIO) + Days Sales outstanding(DSO) - Days Payble outstanding (DPO)
DIO = Average inventory/Cost of sales per day;
Average inventory = 97,350;
Cost of sales per day = Cost of sales /365 = 759,800/365 = 2,081.64
DIO = 97,350/2,081.64 = 46.77 days
DSO = Average Accounts Receivables/Net Sales per day ;
Net Sales per day = Net sales/365 = 1,310,000/365 = $3,589.04 ;
Accounts Receivables = 93,100 ; DSO = 93,100/3,589.04 = 25.94 days
DPO = Average accounts payables/Cost of sales per day ;
Average Accouns payable = Opening payable + Closing payable/2
= 99,000+114,000/2
= 213,000/2 = 106,500
Note; Current liabilites are assumed as Accounts payable
Cosf of sales per day = 2081.64
DPO = 106,500/2081.64 = 51.56 days
Operting Cycle = DIO + DSO - DPO = 46.77 dasy + 25.94 days - 51.56 days = 21.15 days
12.Total Assets Turnover = Turnover/Average Total Assets ;
Turnover = 1,310,000;
Average total assets = Opening balance of assets + Closing balance of assets/2
= 1,058,600 + 959,000/2
= 2,017,600/2
=1,008,800
Total Asset Turnover = 1,310,000/1,008,800 = 12.99 times
13. Times interest earned Ratio = Net operating Income/Interest expenses = 393,125/18,500 = 21.25 times
14. Debt - Equity Ratio at the end of the year = Total LIabilities/ Stockholders Equity = 254,000/705,000 = 0.36
15. Equity Multiplier = Totla Assets/Stockholders equity = 1,008,800/705,000 = 1.43
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.