Vockery Market Co. Balance Sheet 2018 2017 Cash 20,000 24,000 ST Investments 18,

Question

Vockery Market Co. Balance Sheet 2018 2017 Cash          20,000          24,000 ST Investments          18,000          26,000 Net Accounts Receivable          50,000          78,000 Inventory          70,000          66,000 Prepaid Expenses          12,000          10,000 Total Current Assets        170,000        204,000 PP&E        105,000          85,000 Total Assets        275,000        289,000 Total Current Liabilities        130,000        120,000 Income Statement: Net Sales        478,000 Cost of Goods Sold        318,000 Compute the following ratios: Current ratio Acid-test ratio Inventory turnover Days' sales in inventory Days' sales in receivables Gross profit percentage Vockery Market Co. Balance Sheet 2018 2017 Cash          20,000          24,000 ST Investments          18,000          26,000 Net Accounts Receivable          50,000          78,000 Inventory          70,000          66,000 Prepaid Expenses          12,000          10,000 Total Current Assets        170,000        204,000 PP&E        105,000          85,000 Total Assets        275,000        289,000 Total Current Liabilities        130,000        120,000 Income Statement: Net Sales        478,000 Cost of Goods Sold        318,000 Compute the following ratios: Current ratio Acid-test ratio Inventory turnover Days' sales in inventory Days' sales in receivables Gross profit percentage

Explanation / Answer

1) Current ratio = 170000/130000 = 1.31:1

2) Acid test ratio = (170000-70000-12000)/130000 = 0.68:1

3) Inventory turnover = 318000/68000 = 4.68 times

4) Days' sales in inventory = 365/4.68 = 77.99 days

5) Days's sales in receivable = 64000*365/478000 = 48.87 days

6) Gross profit percentage = (478000-318000)*100/478000 = 33.47%

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