The following items are taken fromthe financial statements of the Kern Co. All s
ID: 2504099 • Letter: T
Question
The following items are taken fromthe financial statements of the Kern Co. All sales are made on account. Calculate the accounts receivable turnover, the merchandise inventory turnover, and the ratio of stockholders' equity to liabilities. Show your work under "Calculations" and round off figures to two decimal places.
Average Accounts Receivable $ 218,000
Average Merchandise Inventory 220,000
Gross Profit 1,160,000
Net Income 180,000
Sales (net on account) 1,800,000
total assets 1,300,000
Total liablities 700,000
1.) Accounts receivable turnover ________
2.) Merchandise Inventory turnover ________
3.) Ratio of stockholder's equity to liabilities _______
Explanation / Answer
The following items are taken fromthe financial statements of the Kern Co. All sales are made on account. Calculate the accounts receivable turnover, the merchandise inventory turnover, and the ratio of stockholders' equity to liabilities. Show your work under "Calculations" and round off figures to two decimal places.
Average Accounts Receivable $ 218,000
Average Merchandise Inventory 220,000
Gross Profit 1,160,000
Net Income 180,000
Sales (net on account) 1,800,000
total assets 1,300,000
Total liablities 700,000
1.) Accounts receivable turnover = 218000/1800000 = 12.11%
2.) Merchandise Inventory turnover = (1800000-1160000)/220000 = 2.91 Times
3.) Ratio of stockholder's equity to liabilities = (1300000-700000)/700000 = 85.71%
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