The financial statements for Tyler Toys, Inc. are shown below: Tyler Toys, Inc.
ID: 2789179 • Letter: T
Question
The financial statements for Tyler Toys, Inc. are shown below:
Tyler Toys, Inc.
Income Statement for Years Ending December 31, 2013 and 2014
2014
2013
Revenue
$14,146,762
$13,567,314
Cost of goods sold
$-8,448,377
$-8,131,549
Selling, general, and
administrative expenses
$-998,241
$-980,596
Depreciation
$-1,497,573
$-1,471,654
EBIT
$3,202,571
$2,983,515
Interest expense
$-376,395
$-354,275
Taxes
$-1,073,947
$-999,111
Net income
$1,752,229
$1,630,129
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Tyler Toys, Inc.
Balance Sheet as of December 31, 2013 and 2014
ASSETS
2014
2013
LIABILITIES
2014
2013
Current assets
Current liabilities
Cash
$190,053
$187,693
Accounts payable
$1,545,460
$1,455,533
Investments
$180,985
$121,500
Short-term debt
$311,089
$332,423
Accounts receivable
$667,572
$631,508
Total current liabilities
$1,856,549
$1,787,956
Inventory
$587,938
$563,422
Long-term liabilities
Total current assets
$1,626,548
$1,504,123
Debt
$7,286,077
$6,604,804
Long-term assets
Other liabilities
$1,463,741
$1,346,208
Investments
$3,053,060
$2,827,358
Total liabilities
$10,606,367
$9,738,968
Plant, property, and equipment
$8,496,079
$8,481,772
OWNERS’ EQUITY
Goodwill
$348,823
$346,609
Common stock
$1,458,475
$1,453,150
Intangible assets
$1,157,641
$956,591
Retained earnings
$2,617,309
$2,924,335
Total owners’ equity
$4,075,784
$4,377,485
TOTAL LIABILITIES
TOTAL ASSETS
$14,682,151
$14,116,453
AND OWNERS’ EQUITY
$14,682,151
$14,116,453
Calculate the inventory turnover, days' sales in inventory, receivables turnover, days' sales in receivables, and total asset turnover for 2013 and 2014 for Tyler Toys. Should any of these ratios or the change in a ratio warrant concern for the managers of Tyler Toys or the shareholders?
What is the inventory turnover ratio for 2014?
(Round to four decimal places.)
What is the inventory turnover ratio for 2013?
(Round to four decimal places.)
What is the days' sales in inventory ratio for 2014?
days(Round to four decimal places.)
What is the days' sales in inventory ratio for 2013?
days(Round to four decimal places.)
What is the receivables turnover ratio for 2014?
(Round to four decimal places.)
What is the receivables turnover ratio for 2013?
(Round to four decimal places.)
What is the days' sales in receivables ratio for 2014?
days(Round to four decimal places.)
What is the days' sales in receivables ratio for 2013?
days(Round to four decimal places.)
What is the total asset turnover ratio for 2014?
(Round to four decimal places.)
What is the total asset turnover ratio for 2013?
(Round to four decimal places.)
Should any of these ratios or the change in a ratio warrant concern for the managers of Tyler Toys or the shareholders?(Select the best response.)
A.The company has a very good turnover of assets and collects its receivables quickly; thus there are no real concerns from these ratios.
B.The company has a very good turnover of assets but collects its receivables slowly; thus there are some real concerns from these ratios.
C.The company has a very good turnover of assets and collects its receivables quickly; thus there are major concerns from these ratios.
D.The company has a very poor turnover of assets and collects its receivables quickly; thus there are some concerns from these ratios.
Tyler Toys, Inc.
Income Statement for Years Ending December 31, 2013 and 2014
2014
2013
Revenue
$14,146,762
$13,567,314
Cost of goods sold
$-8,448,377
$-8,131,549
Selling, general, and
administrative expenses
$-998,241
$-980,596
Depreciation
$-1,497,573
$-1,471,654
EBIT
$3,202,571
$2,983,515
Interest expense
$-376,395
$-354,275
Taxes
$-1,073,947
$-999,111
Net income
$1,752,229
$1,630,129
Explanation / Answer
Ratio Analysis
2013
2014
Inventory turnover ratio
cost of goods sold/inventory
14.43243075
14.36950325
cost of goods sold
8,131,549
8,448,377
inventory
563,422
587,938
Days sales in inventory
365/inventory turnover ratio
25.29026511
25.40101726
Inventory turnover ratio
14.43243075
14.36950325
receivable turnover ratio
revenue/accounts receivables
21.48399387
21.19136513
revenue
13,567,314
14,146,762
accounts receivables
631,508
667,572
days' sales in receivables ratio
365/receivable turnover ratio
25.29026511
17.22399656
receivable turnover ratio
14.43243075
21.19136513
total asset turnover ratio
revenue/total assets
0.961099364
0.963534703
revenue
13,567,314
14,146,762
total assets
14,116,453
14,682,151
Note- In calculating the receivable turnover, inventory turnover and total asset turnover, accounts receivables, inventory and total assets of the year are used instead of average receivable, inventory and average total assets as opening balance for 2013 are not provided in the question
Ratio Analysis
2013
2014
Inventory turnover ratio
cost of goods sold/inventory
14.43243075
14.36950325
cost of goods sold
8,131,549
8,448,377
inventory
563,422
587,938
Days sales in inventory
365/inventory turnover ratio
25.29026511
25.40101726
Inventory turnover ratio
14.43243075
14.36950325
receivable turnover ratio
revenue/accounts receivables
21.48399387
21.19136513
revenue
13,567,314
14,146,762
accounts receivables
631,508
667,572
days' sales in receivables ratio
365/receivable turnover ratio
25.29026511
17.22399656
receivable turnover ratio
14.43243075
21.19136513
total asset turnover ratio
revenue/total assets
0.961099364
0.963534703
revenue
13,567,314
14,146,762
total assets
14,116,453
14,682,151
- The company has a very good turnover of assets and collects its receivables quickly; thus there are no real concerns from these ratios.
Note- In calculating the receivable turnover, inventory turnover and total asset turnover, accounts receivables, inventory and total assets of the year are used instead of average receivable, inventory and average total assets as opening balance for 2013 are not provided in the question
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