Balance Sheet Analysis Complete the balance sheet and sales information in the t
ID: 2730778 • Letter: B
Question
Balance Sheet Analysis
Complete the balance sheet and sales information in the table that follows for J. White Industries using the following financial data:
Total assets turnover: 2.5
Gross profit margin on sales: (Sales - Cost of goods sold)/Sales = 27%
Total liabilities-to-assets ratio: 60%
Quick ratio: 1.00
Days sales outstanding (based on 365-day year): 35 days
Inventory turnover ratio: 6.0
Round your answers to the nearest whole dollar.
Balance Sheet
Partial Income StatementInformation Sales $ Cost of goods sold $
Explanation / Answer
Total Asset turnover ratio=Sales/Total Assets
so Sales/$400,000=2.5
Sales=$1,000,000
Cost of goods sold=Sales-Gross profit margin=$1,000,000-27%*$1,000,000=$1,000,000-$270,000=$730,000
Total liabilities-to-assets ratio=Total liabilities/Assets=0.6
Total liabilities=0.6*Assets=$400,000*0.6=$240,000
Accounts payable=Total liabilities-Long term debt=$240,000-$50,000=$190,000
Common stock=Total assets-Total liabilities-Retained earnings=$400,000-$240,000-$100,000=$60,000
Inventory Turnover ratio=sales/Inventory
$1,000,000/Inventory=6
Inventory=$1,000,000/6=$166,667
Quick ratio=(Current Assets-Inventory)/Current liabilities
(Current Assets-$166,667)/$190,000=1
Current Assets=$190,000+$166,667=$356,667
Days sales outstanding=Accounts Receivable*no of days/Sales
so Accounts receivable*365/$1,000,000=35 days
Accounts receivable=35*$1,000,000/365=$95,890
Cash=Current Assets-Inventory-Accounts receivable=$356,667-$166,667-$95,890=$94,110
Fixed Assets=Total Assets-Current Assets=$400,000-$356,667=$43,333
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