Purchase Solution

# Formulas for Balance Sheet Analysis

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Bennis Company has the following comparative balance sheet data.

BENNIS COMPANY
Balance Sheets
December 31

2012 // 2011
Cash \$ 14,560 // \$ 29,770
Receivables (net) 69,730 // 59,620
Inventories 60,250 // 50,480
Plant assets (net) 200,200 // 180,300

\$344,740 // \$320,170

Accounts payable \$49,620 // \$55,680
Mortgage payable (15%) 99,590 // 99,590
Common stock, \$10 par 139,800 // 120,100
Retained earnings 55,730 // 44,800

\$344,740 // \$320,170

1.Net income was \$25,300.

2.Sales on account were \$409,700. Sales returns and allowances were \$19,400.

3.Cost of goods sold was \$197,100.

4.The allowance for doubtful accounts was \$2,600 on December 31, 2012, and \$2,040 on December 31, 2011.

Compute the following ratios at December 31, 2012. (a) Current. (b) Acid-test. (c) Receivables turnover. (d) Inventory turnover. (Round answers to 1 decimal place, e.g. 10.5.).

##### Solution Summary

In this solution the following ratios at December 31, 2012. (a) Current. (b) Acid-test. (c) Receivables turnover. (d) Inventory turnover are calculated.

##### Solution Preview

The formula for the current ratio = current assets / current liabilities

The formula for the acid test ratio = cash + accounts ...

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