Financial Ratios Financial statements for Paulson's Pet Store are shown. Paulson's Pet Store Income Statement For Year Ended December 31, 20-- Revenue from sales: Sales $326,040 Less: Sales returns and allowances 5,360 Net sales $320,680 Cost of goods sold: Merchandise inventory, January 1, 20-- $29,200 Estimated returns inventory, January 1, 20-- 800 $30,000 Purchases $162,630 Less: Purchases returns and allowances $4,080 Less: Purchases discounts 3,200 7,280 Net purchases $155,350 Add freight-in 1,600 Cost of goods purchased 156,950 Goods available for sale $186,950 Less: Merchandise inventory, December 31, 20-- $24,900 Less: Estimated returns inventory, December 31, 20-- 1,100 26,000 Cost of goods sold 160,950 Gross profit $159,730 Operating expenses: Wages expense $69,300 Advertising expense 1,100 Supplies expense 900 Phone expense 2,736 Utilities expense 2,864 Insurance expense 1,600 Depreciation expense-building 10,000 Depreciation expense-store equipment 1,800 Miscellaneous expense 600 Total operating expenses 90,900 Income from operations $68,830 Other expenses: Interest expense 640 Net income $68,190 Paulson's Pet Store Statement of Owner’s Equity For Year Ended December 31, 20-- B. Paulson, capital, January 1, 20-- $464,310 Add additional investments 40,000 Total investment $504,310 Net income for the year $68,190 Less: Withdrawals for the year 4,800 Increase in capital 63,390 B. Paulson, capital, December 31, 20-- $567,700 Paulson's Pet Store Balance Sheet December 31, 20-- Assets Current assets: Cash $23,430 Accounts receivable 59,370 Merchandise inventory 24,900 Estimated returns inventory 1,100 Supplies 2,500 Prepaid insurance 1,800 Total current assets $113,100 Property, plant, and equipment: Land $90,000 Building $350,000 Less: Accumulated depreciation 20,000 330,000 Store Equipment $120,000 Less: Accumulated depreciation 3,600 116,400 536,400 Total assets $649,500 Liabilities Current liabilities: Note payable $2,000 Accounts payable 59,570 Customer refunds payable 1,600 Wages payable 1,200 Sales tax payable 3,430 Total current liabilities $67,800 Long-term liabilities: Note payable $16,000 Less: Current portion 2,000 14,000 Total liabilities $81,800 Owner's Equity B. Paulson, capital 567,700 Total liabilities and owner's equity $649,500 All sales are credit sales. The Accounts Receivable balance on January 1, 20--, was $10,100. Required: Compute the financial ratios. Round answers to one decimal place. Financial Ratios Current ratio 1.7 Quick ratio 1.2 Working capital 45300 Return on owner's equity Accounts receivable turnover Average number of days to collect receivables Inventory turnover Average number of days to sell inventory

Financial Ratios Financial statements for Paulson's Pet Store are shown. Paulson's Pet Store Income Statement For Year Ended December 31, 20-- Revenue from sales: Sales $326,040 Less: Sales returns and allowances 5,360 Net sales $320,680 Cost of goods sold: Merchandise inventory, January 1, 20-- $29,200 Estimated returns inventory, January 1, 20-- 800 $30,000 Purchases $162,630 Less: Purchases returns and allowances $4,080 Less: Purchases discounts 3,200 7,280 Net purchases $155,350 Add freight-in 1,600 Cost of goods purchased 156,950 Goods available for sale $186,950 Less: Merchandise inventory, December 31, 20-- $24,900 Less: Estimated returns inventory, December 31, 20-- 1,100 26,000 Cost of goods sold 160,950 Gross profit $159,730 Operating expenses: Wages expense $69,300 Advertising expense 1,100 Supplies expense 900 Phone expense 2,736 Utilities expense 2,864 Insurance expense 1,600 Depreciation expense-building 10,000 Depreciation expense-store equipment 1,800 Miscellaneous expense 600 Total operating expenses 90,900 Income from operations $68,830 Other expenses: Interest expense 640 Net income $68,190 Paulson's Pet Store Statement of Owner’s Equity For Year Ended December 31, 20-- B. Paulson, capital, January 1, 20-- $464,310 Add additional investments 40,000 Total investment $504,310 Net income for the year $68,190 Less: Withdrawals for the year 4,800 Increase in capital 63,390 B. Paulson, capital, December 31, 20-- $567,700 Paulson's Pet Store Balance Sheet December 31, 20-- Assets Current assets: Cash $23,430 Accounts receivable 59,370 Merchandise inventory 24,900 Estimated returns inventory 1,100 Supplies 2,500 Prepaid insurance 1,800 Total current assets $113,100 Property, plant, and equipment: Land $90,000 Building $350,000 Less: Accumulated depreciation 20,000 330,000 Store Equipment $120,000 Less: Accumulated depreciation 3,600 116,400 536,400 Total assets $649,500 Liabilities Current liabilities: Note payable $2,000 Accounts payable 59,570 Customer refunds payable 1,600 Wages payable 1,200 Sales tax payable 3,430 Total current liabilities $67,800 Long-term liabilities: Note payable $16,000 Less: Current portion 2,000 14,000 Total liabilities $81,800 Owner's Equity B. Paulson, capital 567,700 Total liabilities and owner's equity $649,500 All sales are credit sales. The Accounts Receivable balance on January 1, 20--, was $10,100. Required: Compute the financial ratios. Round answers to one decimal place. Financial Ratios Current ratio 1.7 Quick ratio 1.2 Working capital 45300 Return on owner's equity Accounts receivable turnover Average number of days to collect receivables Inventory turnover Average number of days to sell inventory

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Financial Ratios

Financial statements for Paulson's Pet Store are shown.

Paulson's Pet Store Income Statement For Year Ended December 31, 20--
Revenue from sales:
Sales			$326,040
Less: Sales returns and allowances			5,360
Net sales				$320,680
Cost of goods sold:
Merchandise inventory, January 1, 20--		$29,200
Estimated returns inventory, January 1, 20--		800	$30,000
Purchases		$162,630
Less: Purchases returns and allowances	$4,080
Less: Purchases discounts	3,200	7,280
Net purchases		$155,350
Add freight-in		1,600
Cost of goods purchased			156,950
Goods available for sale			$186,950
Less: Merchandise inventory, December 31, 20--		$24,900
Less: Estimated returns inventory, December 31, 20--		1,100	26,000
Cost of goods sold				160,950
Gross profit				$159,730
Operating expenses:
Wages expense			$69,300
Advertising expense			1,100
Supplies expense			900
Phone expense			2,736
Utilities expense			2,864
Insurance expense			1,600
Depreciation expense-building			10,000
Depreciation expense-store equipment			1,800
Miscellaneous expense			600
Total operating expenses				90,900
Income from operations				$68,830
Other expenses:
Interest expense				640
Net income				$68,190

Paulson's Pet Store Statement of Owner’s Equity For Year Ended December 31, 20--
B. Paulson, capital, January 1, 20--		$464,310
Add additional investments		40,000
Total investment		$504,310
Net income for the year	$68,190
Less: Withdrawals for the year	4,800
Increase in capital		63,390
B. Paulson, capital, December 31, 20--		$567,700

Paulson's Pet Store Balance Sheet December 31, 20--
Assets
Current assets:
Cash		$23,430
Accounts receivable		59,370
Merchandise inventory		24,900
Estimated returns inventory		1,100
Supplies		2,500
Prepaid insurance		1,800
Total current assets			$113,100
Property, plant, and equipment:
Land		$90,000
Building	$350,000
Less: Accumulated depreciation	20,000	330,000
Store Equipment	$120,000
Less: Accumulated depreciation	3,600	116,400	536,400
Total assets			$649,500
Liabilities
Current liabilities:
Note payable	$2,000
Accounts payable	59,570
Customer refunds payable	1,600
Wages payable	1,200
Sales tax payable	3,430
Total current liabilities		$67,800
Long-term liabilities:
Note payable	$16,000
Less: Current portion	2,000	14,000
Total liabilities			$81,800
Owner's Equity
B. Paulson, capital			567,700
Total liabilities and owner's equity			$649,500

All sales are credit sales. The Accounts Receivable balance on January 1, 20--, was $10,100.

Required:

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


Financial Ratios

Current ratio	1.7
Quick ratio	1.2
Working capital	45300
Return on owner's equity
Accounts receivable turnover
Average number of days to collect receivables
Inventory turnover
Average number of days to sell inventory

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