1. Current ratio for fiscal years 2020 and 2021. 2. Acid-test (quick) ratio for fiscal years 2020 and 2021. 3. Inventory turnover for fiscal year 2021.
1. Current ratio for fiscal years 2020 and 2021. 2. Acid-test (quick) ratio for fiscal years 2020 and 2021. 3. Inventory turnover for fiscal year 2021.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Problem 24-03 a
Splish Corporation was formed 5 years ago through a public subscription of common stock. Daniel Brown, who owns 15% of the common stock, was one of the organizers of Splish and is its current president. The company has been successful, but it currently is experiencing a shortage of funds. On June 10, 2021, Daniel Brown approached the Topeka National Bank, asking for a 24-month extension on two $34,980 notes, which are due on June 30, 2021, and September 30, 2021. Another note of $6,060 is due on March 31, 2022, but he expects no difficulty in paying this note on its due date. Brown explained that Splish’s cash flow problems are due primarily to the company’s desire to finance a $298,500 plant expansion over the next 2 fiscal years through internally generated funds.
The commercial loan officer of Topeka National Bank requested the following financial reports for the last 2 fiscal years.
(a)
Compute the following items for Splish Corporation. (Round answers to 2 decimal places, e.g. 2.25 or 2.25%.)
The commercial loan officer of Topeka National Bank requested the following financial reports for the last 2 fiscal years.
Splish Corporation
Balance Sheet March 31 |
||||
---|---|---|---|---|
Assets |
2021
|
2020
|
||
Cash
|
$18,050 | $12,590 | ||
Notes receivable
|
147,320 | 130,790 | ||
|
132,920 | 125,940 | ||
Inventories (at cost)
|
105,990 | 49,780 | ||
Plant & equipment (net of depreciation)
|
1,445,010 | 1,412,350 | ||
Total assets
|
$1,849,290 | $1,731,450 | ||
Liabilities and Owners’ Equity | ||||
Accounts payable
|
$78,710 | $90,810 | ||
Notes payable
|
76,020 | 61,260 | ||
Accrued liabilities
|
4,360 | 1,880 | ||
Common stock (130,000 shares, $10 par)
|
1,301,250 | 1,293,620 | ||
Retained earningsa
|
388,950 | 283,880 | ||
Total liabilities and
|
$1,849,290 | $1,731,450 | ||
aCash dividends were paid at the rate of $1 per share in fiscal year 2020 and $2 per share in fiscal year 2021. |
Splish Corporation
Income Statement For the Fiscal Years Ended March 31 |
||||
---|---|---|---|---|
2021
|
2020
|
|||
Sales revenue
|
$3,000,740 | $2,718,060 | ||
Cost of goods solda
|
1,528,300 | 1,433,820 | ||
Gross margin
|
1,472,440 | 1,284,240 | ||
Operating expenses
|
868,470 | 779,910 | ||
Income before income taxes
|
603,970 | 504,330 | ||
Income taxes (40%)
|
241,588 | 201,732 | ||
Net income
|
$362,382 | $302,598 | ||
aDepreciation charges on the plant and equipment of $99,500 and $102,710 for fiscal years ended March 31, 2020 and 2021, respectively, are included in cost of goods sold. |
(a)
Compute the following items for Splish Corporation. (Round answers to 2 decimal places, e.g. 2.25 or 2.25%.)
1. | ||
---|---|---|
2. | Acid-test (quick) ratio for fiscal years 2020 and 2021. | |
3. | Inventory turnover for fiscal year 2021. | |
4. | Return on assets for fiscal years 2020 and 2021. (Assume total assets were $1,690,000 at 3/31/19.) | |
5. | Percentage change in sales, cost of goods sold, gross margin, and net income after taxes from fiscal year 2020 to 2021. |
2020
|
2021
|
|||||||
---|---|---|---|---|---|---|---|---|
1. |
Current ratio
|
enter the ratio rounded to 2 decimal places
|
:1 |
enter the ratio rounded to 2 decimal places
|
:1 | |||
2. |
Acid-test (quick) ratio
|
enter the ratio rounded to 2 decimal places
|
:1 |
enter the ratio rounded to 2 decimal places
|
:1 | |||
3. |
Inventory turnover
|
enter the inventory turnover rounded to 2 decimal places
|
times | |||||
4. |
Return on assets
|
enter the return on assets in percentages rounded to 2 decimal places
|
% |
enter the return on assets in percentages rounded to 2 decimal places
|
% |
5. |
Percent Changes
|
Percent Increase
|
|||
---|---|---|---|---|---|
Sales revenue
|
enter percentages rounded to 2 decimal places
|
% | |||
Cost of goods sold
|
enter percentages rounded to 2 decimal places
|
% | |||
Gross margin
|
enter percentages rounded to 2 decimal places
|
% | |||
Net income after taxes
|
enter percentages rounded to 2 decimal places
|
% |
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