PLEASE MAKE SURE TO EXPLAIN HOW ANSWERS WERE FOUND. THANK YOU Exercise 14.12 Com
ID: 2549553 • Letter: P
Question
PLEASE MAKE SURE TO EXPLAIN HOW ANSWERS WERE FOUND. THANK YOU
Exercise 14.12 Computing Ratios (LO14-7)
During the year the company earned a gross profit of $1,116,000 on sales of $2,950,000. Accounts receivable, inventory, and plant assets remained almost constant in amount throughout the year, so year-end figures may be used rather than averages.
Compute the accounts receivable turnover (all sales were on credit). (Round your answer to 2 decimal places.)
A condensed balance sheet for Bradford Corporation prepared at the end of the year appears as follows:
Explanation / Answer
Answer:
1
Current Ratio
=Current assets/ current liability
=104000+110000+280000+60,000/ 124000
=554000/124000
=4.47
____________________________________
Quick Ratio
=Current assets-inventory-prepaid expenses/ current liability
=554000-280,000-60,000 /124000
=214000/124000
=1.73
___________________________
Net Working Capital
Current assets- current liability
=554000-124000
=430,000
____________________________
Debt Ratio
=Total debt/ total Assets
=511000 /1214000
=0.4209
=42.09%
__________________________________
Account Receivable Turnover
=Net credit sales/ average account receivable
=2950,000 / 110,000
= 26.82
__________________________________
Inventory Turnover
=cost of gods sold/ average inventory
= ( 2,950,000 – 1,116,000 ) / 280,000
= 6.55
__________________________________
Book value per share of capital
=Net Assets / Number of share
=1214000-511000/60,000
=$11.72
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