6. The following accounts are reported for the Whitewasher Corp. for the end of
ID: 2731381 • Letter: 6
Question
6. The following accounts are reported for the Whitewasher Corp. for the end of fiscal year 2013 (all figures in millions): Cash = $12.0 Accounts Payable = $108.0 Inventories = $180.0 Total Current Assets = $395.0 Short-term Investments = $23.0 Long-term Bonds = $150.0 Net Plant and equipment = $300.0 Total Current Liabilities = $270.0 Accruals = $72.0 Common stock = $50.0 Total Common equity = $275.0 Sales = $1,240 Number of Shares outstanding = 5 million Market price per share = $52.00 Construct a balance sheet for Whitewasher for fiscal year end 2013. Assume that the only missing accounts are accounts receivable, notes payable, and retained earnings. Everything else is assumed to be zero. (10 pts.) 7. Giventhe information for The Whitewasher Corp. in #8 above, calculate the Quick Ratio, Days Sales Outstanding, Fixed Assets Turnover, Debt ratio, Equity Multiplier and Market to Book ratio. Also, if Whitewasher’s ROE was 11.4% for 2013, what must have been its Profit Margin for 2013? (10 pts.)Explanation / Answer
Assets Liabilities Cash 12 Account Payables 108 Inventories 180 Notes payable(Plugged-in Figure) 90 Accounts receivable(Plugged-in Figure) 180 Accruals 72 Total Current Liabilities 270 Short-term Investments 23 Long-term bonds 150 Total Current Assets 395 Common stock 50 Net Plant& Equipment 300 Retained earnings(Plugged-in Figure) 225 Total Common equity 275 Total Assets 695 695 Quick Ratio = Total Current Assets-Inventory& Prepaid expenses/Current Liabilities (395-180)/270= 0.80 Days Sales Outstanding=( Accounts Receivables/Net credit sales)*365 (180/1240)*365= 52.98 days Fixed Assets Turnover= Sales/Fixed assets *100 1240/300*100= 413.33 Debt ratio= Total liabiities/Total Assets 420/695= 0.60 Equity Multiplier= Total Assets/Stockholders' Equity 695/275= 2.53 Market to Book ratio= Marke t value of shares/Book value of shares (5000000*52)/50000000= 5.2 ROE= Net Income/Shareholders' Equity = 11.4% Net Income/275=0.114 So, Net income=31.35 Sales = 1,240 Profit Margin= 31.35/1240*100 = 2.53 %
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