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
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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 | ||
|
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: |
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 | |
to 1 | |
Quick ratio | to 1 |
$ | |
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 |
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