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Ratio Analysis

Partial Balance Sheet
December 31,2009
Current assets:
Cash $33,493
Marketable securities $215,147
Trade receivables, less allowance of $6,000 $255,000
Inventories, LIFO $523,000
Prepaid expenses $26,180
Total current assets $1,052,820

Current liabilities
Trade accounts payable $103,689
Notes payable (primarily to banks) and commercial paper $210,381
Accrued expenses and other liabilities $120,602
Income taxes payable $3,120
Current maturities of long-term debt $22,050
Total current liabilities $459,842

Partial Income Statement
For Year Ended December 31, 2009

Net sales $3,050,600
Miscellaneous income $45,060

Cost and expenses:
Cost of sales $2,185,100
Selling, general, and administrative expenses $350,265
Interest expense $45,600
Income taxes $300,000
Net income $214,695

The trade receivables at December 31, 2008, were $280,000, net of an allowance of $8,000, for a gross receivables figure of $288,000. The Inventory at December 31,2008, was $565,000

Compute the following:

a. Working capital
b. Current ratio
c. Acid-test ratio
d. Cash ratio
e. Days' sales in receivables
f. Accounts receivable turnover in days
g. Days' sales in inventory
h. Inventory turnover in days
i. Operating cycle

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Solution Summary

The solution computes Working capital, Current ratio, Acid-test ratio, Cash ratio, Days' sales in receivables, Accounts receivable turnover in days, Days' sales in inventory, Inventory turnover in days, Operating cycle.