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Answer all the following problems, except the last one, using the data in the Ba

ID: 2802325 • Letter: A

Question

Answer all the following problems, except the last one, using the data in the Balance Sheet and Income Statement given below.

Assume that the year has 365 days, and that all sales are on credit.

                  B A L A N C E S H E E T (12/31)                                                           (01/01 to 12/31)

ASSETS ($000)                        LIABILITIES ($000)                                                  Income Statement ($000)

Cash                       58              A/P                               229                                      Sales                      1,697

A/R                        171             S-T Debt                           7                                      COGS                    1,222

Inventory               239             Other CL                         24                                      Gross Profit             475

Current Assets    468             CL                                 260                                       S&A                         425

Fixed Assets         126             L-T Debt                          64                                       EBIT                         50

                                                Total Liabilities                324                                      Interest                     13

                                                Equity                              270                                     EBT                           37

Total Assets         594           Total Liab. & Equity        594                                     Taxes                           6

                                                                                                                                   Net Income              31

Question 1

What is the current ratio (CR)? Round the answer to 1 decimal; e.g., 2.

Question 2

What is the days of sales in cash (DSC)? Round the answer to 1 decimal; e.g., 2.4

Question 3

What is the average collection period (ACP), in days? Round the answer to 1 decimal

Question 4

.What is the days of sales in inventory (DSI)? Round the answer to 1 decimal;

Question 5

What is the asset turnover (ATO)? Round the answer to 1 decimal;

Question 6

What is the equity multiplier (EM)? Round the answer to 1 decimal

Question 7

1. What is the profit margin (PM)? Give the answer as a percent, rounded to 1 decimal;

Question 8

1. What is the return on equity (ROE)? Give the answer as a percent, rounded to 1 decimal;

Question 9

1.Ladri Biciclette, S.A. sells only one model of bicycles. This Italian firm expects to increase its prices by 24% next year and, as a result, it also expects the number of bicycles sold to decrease by 13% next year, relative to this year. If these expectations materialize, what will be the exact percentage change in revenues for Ladri next year, relative to this year? Give the answer as a percent with two decimals

Explanation / Answer

Answer 1.

Current Ratio = Current Assets - Current Liabilities
Current Ratio = 468 - 260
Current Ratio = 208

Answer 2.

Days of Sales in cash = 365 * Accounts Receivable / Sales
Days of Sales in cash = 365 * 171 / 1,697
Days of Sales in cash = 36.8 days

Answer 3.

Average Collection Period = 365 * Accounts Receivable / Sales
Average Collection Period = 365 * 171 / 1,697
Average Collection Period = 36.8 days

Answer 4.

Days of Sales in Inventory = 365 * Inventory / Cost of Goods Sold
Days of Sales in Inventory = 365 * 239 / 1,222
Days of Sales in Inventory = 71.4 days

Answer 5.

Assets Turnover = Sales / Total Assets
Assets Turnover = 1,697 / 594
Assets Turnover = 2.9 times

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