Financial Ratios Financial statements for Backlund Farm Supply are shown. Backlund Farm SupplyIncome StatementFor Year Ended December 31, 20-- Revenue from sales: Sales $358,644 Less: Sales returns and allowances 5,896 Net sales $352,748 Cost of goods sold: Merchandise inventory, January 1, 20-- $65,120 Estimated returns inventory 880 $66,000 Purchases $178,904 Less: Purchases returns and allowances $4,480 Less: Purchases discounts 3,520 8,000 Net purchases $170,896 Add freight-in 1,760 Cost of goods purchased 172,656 Goods available for sale $238,656 Less: Merchandise inventory, December 31, 20-- $71,280 Less: Estimated returns inventory 1,320 72,600 Cost of goods sold 166,056 Gross profit $186,692 Operating expenses: Wages expense $76,340 Advertising expense 1,320 Supplies expense 880 Phone expense 3,010 Utilities expense 3,150 Insurance expense 1,760 Depreciation expense-building 11,000 Depreciation expense-store equipment 1,980 Miscellaneous expense 660 Total operating expenses 100,100 Income from operations $86,592 Other expenses: Interest expense 704 Net income $85,888 Backlund Farm SupplyStatement of Owner’s EquityFor Year Ended December 31, 20-- J. Backlund, capital, January 1, 20-- $507,752 Add additional investments 80,000 Total investment $587,752 Net income for the year $85,888 Less: Withdrawals for the year 5,280 Increase in capital 80,608 J. Backlund, capital, December 31, 20-- $668,360 Backlund Farm SupplyBalance SheetDecember 31, 20-- Assets Current assets: Cash $25,784 Accounts receivable 10,296 Merchandise inventory 71,280 Estimated returns inventory 1,320 Supplies 2,640 Prepaid insurance 1,980 Total current assets $113,300 Property, plant, and equipment: Land $99,000 Building $385,000 Less: Accumulated depreciation 22,000 363,000 Store Equipment $132,000 Less: Accumulated depreciation-Store Equipment 3,960 128,040 590,040 Total assets $703,340 Liabilities Current liabilities: Note payable $3,000 Accounts payable 10,516 Customer refunds payable 1,760 Wages payable 1,320 Sales tax payable 3,784 Total current liabilities $20,380 Long-term liabilities: Note payable $17,600 Less: Notes payable (current portion) 3,000 14,600 Total liabilities $34,980 Owner's Equity J. Backlund, capital 668,360 Total liabilities and owner's equity $703,340 Net credit sales were $210,000. The Accounts Receivable balance on January 1 was $9,800. Required: Compute the financial ratios. Round answers to one decimal place. Financial Ratios Current ratio to 1 Quick ratio to 1 Working capital $ Return on owner's equity % Accounts receivable turnover Average number of days to collect receivables days Inventory turnover Average number of days to sell inventory days

Financial Ratios Financial statements for Backlund Farm Supply are shown. Backlund Farm SupplyIncome StatementFor Year Ended December 31, 20-- Revenue from sales: Sales $358,644 Less: Sales returns and allowances 5,896 Net sales $352,748 Cost of goods sold: Merchandise inventory, January 1, 20-- $65,120 Estimated returns inventory 880 $66,000 Purchases $178,904 Less: Purchases returns and allowances $4,480 Less: Purchases discounts 3,520 8,000 Net purchases $170,896 Add freight-in 1,760 Cost of goods purchased 172,656 Goods available for sale $238,656 Less: Merchandise inventory, December 31, 20-- $71,280 Less: Estimated returns inventory 1,320 72,600 Cost of goods sold 166,056 Gross profit $186,692 Operating expenses: Wages expense $76,340 Advertising expense 1,320 Supplies expense 880 Phone expense 3,010 Utilities expense 3,150 Insurance expense 1,760 Depreciation expense-building 11,000 Depreciation expense-store equipment 1,980 Miscellaneous expense 660 Total operating expenses 100,100 Income from operations $86,592 Other expenses: Interest expense 704 Net income $85,888 Backlund Farm SupplyStatement of Owner’s EquityFor Year Ended December 31, 20-- J. Backlund, capital, January 1, 20-- $507,752 Add additional investments 80,000 Total investment $587,752 Net income for the year $85,888 Less: Withdrawals for the year 5,280 Increase in capital 80,608 J. Backlund, capital, December 31, 20-- $668,360 Backlund Farm SupplyBalance SheetDecember 31, 20-- Assets Current assets: Cash $25,784 Accounts receivable 10,296 Merchandise inventory 71,280 Estimated returns inventory 1,320 Supplies 2,640 Prepaid insurance 1,980 Total current assets $113,300 Property, plant, and equipment: Land $99,000 Building $385,000 Less: Accumulated depreciation 22,000 363,000 Store Equipment $132,000 Less: Accumulated depreciation-Store Equipment 3,960 128,040 590,040 Total assets $703,340 Liabilities Current liabilities: Note payable $3,000 Accounts payable 10,516 Customer refunds payable 1,760 Wages payable 1,320 Sales tax payable 3,784 Total current liabilities $20,380 Long-term liabilities: Note payable $17,600 Less: Notes payable (current portion) 3,000 14,600 Total liabilities $34,980 Owner's Equity J. Backlund, capital 668,360 Total liabilities and owner's equity $703,340 Net credit sales were $210,000. The Accounts Receivable balance on January 1 was $9,800. Required: Compute the financial ratios. Round answers to one decimal place. Financial Ratios Current ratio to 1 Quick ratio to 1 Working capital $ Return on owner's equity % Accounts receivable turnover Average number of days to collect receivables days Inventory turnover Average number of days to sell inventory days

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Related questions

Question

Financial Ratios

Financial statements for Backlund Farm Supply are shown.

Backlund Farm Supply Income Statement For Year Ended December 31, 20--
Revenue from sales:
Sales			$358,644
Less: Sales returns and allowances			5,896
Net sales				$352,748
Cost of goods sold:
Merchandise inventory, January 1, 20--		$65,120
Estimated returns inventory		880	$66,000
Purchases		$178,904
Less: Purchases returns and allowances	$4,480
Less: Purchases discounts	3,520	8,000
Net purchases		$170,896
Add freight-in		1,760
Cost of goods purchased			172,656
Goods available for sale			$238,656
Less: Merchandise inventory, December 31, 20--		$71,280
Less: Estimated returns inventory		1,320	72,600
Cost of goods sold				166,056
Gross profit				$186,692
Operating expenses:
Wages expense			$76,340
Advertising expense			1,320
Supplies expense			880
Phone expense			3,010
Utilities expense			3,150
Insurance expense			1,760
Depreciation expense-building			11,000
Depreciation expense-store equipment			1,980
Miscellaneous expense			660
Total operating expenses				100,100
Income from operations				$86,592
Other expenses:
Interest expense				704
Net income				$85,888

Backlund Farm Supply Statement of Owner’s Equity For Year Ended December 31, 20--
J. Backlund, capital, January 1, 20--		$507,752
Add additional investments		80,000
Total investment		$587,752
Net income for the year	$85,888
Less: Withdrawals for the year	5,280
Increase in capital		80,608
J. Backlund, capital, December 31, 20--		$668,360

Backlund Farm Supply Balance Sheet December 31, 20--
Assets
Current assets:
Cash		$25,784
Accounts receivable		10,296
Merchandise inventory		71,280
Estimated returns inventory		1,320
Supplies		2,640
Prepaid insurance		1,980
Total current assets			$113,300
Property, plant, and equipment:
Land		$99,000
Building	$385,000
Less: Accumulated depreciation	22,000	363,000
Store Equipment	$132,000
Less: Accumulated depreciation-Store Equipment	3,960	128,040	590,040
Total assets			$703,340
Liabilities
Current liabilities:
Note payable	$3,000
Accounts payable	10,516
Customer refunds payable	1,760
Wages payable	1,320
Sales tax payable	3,784
Total current liabilities		$20,380
Long-term liabilities:
Note payable	$17,600
Less: Notes payable (current portion)	3,000	14,600
Total liabilities			$34,980
Owner's Equity
J. Backlund, capital			668,360
Total liabilities and owner's equity			$703,340

Net credit sales were $210,000. The Accounts Receivable balance on January 1 was $9,800.

Required:

Compute the financial ratios. Round answers to one decimal place.


Financial Ratios

Current ratio	to 1
Quick ratio	to 1
Working capital	$
Return on owner's equity	%
Accounts receivable turnover
Average number of days to collect receivables	days
Inventory turnover
Average number of days to sell inventory	days

Expert Solution

Trending now

This is a popular solution!

Step by step

Solved in 8 steps with 8 images

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Financial Reporting in Hyperinflationary Economies

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.