Calcuating various ratios
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Calculate the following asset activity ratios for the end of 2005:
1. Average Collection Period
2. Inventory Turnover
3. Total Asset Turnover
Please show all work, including formulae and calculations used to arrive at financial values.
(Full problem found in attached file)
ABC Fitness 000's
Income Statement 5-Dec
Sales 2,004,016
Cost of Goods Sold 1,446,733
Gross Profit 577,283
Selling and Ad
Expenses 361,402
Depreciation 56.87
Operating Income
(EBIT) 139,011
Interest expense 34,482
Other Expense 14,124
EBT 90,405
Taxes 24,701
Net Income 65,704
Balance Sheet
Assets
Cash 25.32
Net Receivables 55,514
Inventories 141.35
Prepaids 8,775
Total Current
Assests 230,959
Gross Plant & Equipment 536.74
Accumulated Depreciation -161.7
Net Plant & Equipment 507.34
Other Assets 4,621
Total Assests 1117.96
Liabilities
Notes Payable 1,127
Accounts Payable 144,638
Taxes Payable 16,797
Accrued Expense 98,233
Total Current Liabilities 260,795
Long - Term Debt 415,138
Defferred Taxes 20,396
Total Liabilitie 696,329
Equity
Common Stock 0.32
Capital Surplus 242,843
Retained Earnings 178,468
Total Equity 421,631
Total Liabilities and Equity 1117.96
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Solution Summary
The solution explains the calculation of Average Collection Period, Inventory Turnover and Total Asset Turnover for ABC Fitness
Solution Preview
1. Average Collection Period - This is calculated by dividing the net receivable at the end of the period with per day sales. The per day sale is calculated by dividing the yearly sales by 365 ( the number of days in a year). The sales are $2,004,016. The per days sale is ...
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