Final Exam Sharp Uniforms de information from the company\'s balance sheet follo
ID: 2581751 • Letter: F
Question
Final Exam Sharp Uniforms de information from the company's balance sheet follows. signs, manufactures, and implements corporate identity uniform programs that it rents or sells to customers throughout the United States and Canada. Selected (in millions) Select Income Statement Information Net revenue 43784340 $4576 2,673 .315 96 245 398 Cost of goods sold Selling, general, and administrative expenses Interest expense Income tax expense Net income Select Statement of Cash Flows Information Cash paid for interest Cash flows from operating activities Select Balance Sheet Information Cash and equivalents Marketable securities Accounts receivable 2,553 94 220 668 509 400 18 541 276 37 133 390 537 Prepaid expense and other current assets Accounts payable Current accrued expenses Current portion of long-term debt Other current liabilities 532 275 50 210 437 13 126 1,360 97 Long-term debt Required: Compute the following ratios: (Round your answers to 2 decimal pl aces. Receivable turnover ratio Inventory turnover ratio Current ratio Cash ratio Times interest earned ratio Cash coverage ratioExplanation / Answer
Receivable turnover ratio = Net Sales / Average accounts receivable = $4576m / $536.50m = 8.53 times
Average accounts receivable = ($541m + $532m) / 2 = $1073m / 2 = $536.50m
Inventory turnover ratio = Cost of goods sold / Average inventory = $2673m / $275.50m = 9.70 times
Average inventory = ($276m + $275m) / 2 = $551m / 2 = $275.50m
Current ratio = Current assets / Current liabilities = $1394m / $786m = 1.77
Current assets = Cash and equivalents $537m + Marketable securities $0 + Accounts receivable $532m + Inventories $275m + Prepaid expense and other current assets $50m = $1394m
Current liabilities = Accounts payable $210 + Current accrued expenses $437m + Current portion of long-term debt $13m + Other current liabilities $126m = $786m
Cash ratio = Cash and equivalents / Current liabilities = $537m / $786m = 0.68
Times interest earned ratio = Earnings before interest and tax / Interest = $739m / $96m = 7.70 times
Earnings before interest and tax = Net income $398m + Income tax expense $245m + Interest expense $96m = $739m
Cash coverage ratio = Operating cash flows / Total debt = $668m / $2146m = 0.31
Total debt = Current liabilities $786m + Long-term debt $1360m = $2146m
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