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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

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.