Use the following to answer questions 1 -4 The following information was taken f

Question

Use the following to answer questions 1 -4 The following information was taken from the financial statements of years 2016 and 2017 Coca-Cola for the Net Sales Revenme Statement Cost of goods sold Gross profit 2017 ing, administrative and general er operating charges ing income 96 million in 2004 and $178 million in 2003 e tax expense(tax rate 22.1% in 2004) 5,698 Other revenues (expenses) including interest expense Income before taxes Income Net income 495 37 Balance Sheet S 3.362 Cash and cash equivalents 2,091 Inventories ses and other assets 12,094 5,897 355 Total current assets Equity method investments Cost method investments Other assets Total investment assets Property, plant and equipment, net Trademarks and other intangibles Total assets Current liabilities Long-term debt 314 9,306 6,091 6,097 7,886 2,517 10,971 1,157 3.264 15,392 Other liabilities and deferred taxes 13,252 Total liabilities Total stockholders' equity Total liabilities and stockholders' equity

Explanation / Answer

1.Calculation of Return on assets (ROA)

Return on assets (ROA)                      = Net Income After Taxation / Total Assets

                                                            = [ $ 4847 / ($31327-$5897) ] * 100

                                                            = $ 4847 / $ 25430 * 100

                                                            = 19.0 %        

2.Calculation of Accounts Receivables Turnover ratio and the days sale in receivables

The Answer is B – 10.31 Times and 35.4 Days

Accounts Receivables Turnover ratio = Net Sales / Average Receivables

                                                            = $ 21962 / [ ($2171+ $2091)/2]

                                                            = $ 21962 / $ 2131

                                                            = 10.31 Times

Number of Days sale in receivables    = 365 Days / Accounts Receivables Turnover ratio

                                                            = 365 / 10.31

                                                            = 35.4 Days

3.Calculation of Inventory Turnover Ratio and number of days sales in inventory

The Answer is CB – 5.72 Times and 63.8 Days

Inventory Turnover Ratio                   = Cost of goods sold / Average Inventory

                                                            = $ 7638 / [ ($ 1420 + $ 1252)/2]

                                                            = $ 7638 / 1336

                                                            = 5.72 Times

Number of days sales in inventory     = 365 Days / Inventory Turnover Ratio

                                                            = 365 / 5.72

                                                            = 63.8 Days

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