BALANCE SHEET ANALYSIS Complete the balance sheet and sales information using th

Question

BALANCE SHEET ANALYSIS

Complete the balance sheet and sales information using the following financial data:

Total assets turnover: 1.4x
Days sales outstanding: 33.5 daysa
Inventory turnover ratio: 7x
Fixed assets turnover: 3.5x
Current ratio: 1.6x
Gross profit margin on sales: (Sales - Cost of goods sold)/Sales = 25%
aCalculation is based on a 365-day year. Do not round intermediate calculations. Round your answer to the nearest cent.

Balance Sheet Cash $ ___ Current liabilities $ ___ Accounts receivable ____ Long-term debt 68,750 Inventories ____ Common stock    Fixed assets ____ Retained earnings 68,750 Total assets $275,000 Total liabilities and equity $ ___ Sales $ ___ Cost of goods sold $ ___

Explanation / Answer

Total assets turnover = Sales / Total assets

1.4 = Sales / 275,000

Sales = $385,000

Days of sales outstanding = 365 / Receivables turnover

33.5 = 365 / Receivables turnover

Receivables turnover = 10.8955

receivables turnover = sales / Accounts receivables

10.8955 = 385,000 / Accounts receivables

Accounts receivables = $35,335.7

Gross profit margin on sales: (Sales - Cost of goods sold)/Sales

0.25 = ( 385,000 - cost of goods sold) / 385,000

96,250 = 385,000 - cost of goods sold

cost of goods sold = $288,750

Inventory turnover ratio = Cost of goods sold / Inventory

7 = 288,750 / Inventory

Inventory = $41,250

Fixed assets turnover = Sales / fixed assets

3.5 = 385,000 / fixed assets

Fixed assets = $110,000

Cash = 275,000 - 110,000 - 41,250 - 35,335.7

Cash = $88,414.3

Current ratio = Current assets / current liabilities

1.6 = ( 88,414.3 + 41,250 + 35,335.7) / current liabilities

current liabilities = $103,125

Total liability and equity = 103,125 + 68,750 + 68,750

Total liability and equity = $240,625

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