Homework Help is Here – Start Your Trial Now!
Business
Accounting
How did Office Smart increase its market share—possibly by lowering credit st

How did Office Smart increase its market share—possibly by lowering credit st

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
See similar textbooks
icon
Related questions
Question

How did Office Smart increase its market share—possibly by lowering credit standards?

EXHIBIT C4.1 Office Smart and Industry Significant Ratios Office Smart (for 2007) Industry Current ratio 1.52 2.1 Quick ratio 0.61 1.8 Debt ratio (%) 65.5 65.9 Inventory turnover (times) 2.3 37.3* Receivables turnover (times)** 8.3 7.4 Asset turnover (times) 2.5 3.2 Return on equity (%) 92.1 78.0 Return on sales (%) 12.7 8.4 *Results in published sources show significant variation; the reported result is the mean of three asset- size categories. ** Equivalent to 44 days in accounts receivable. EXHIBIT C4.2 Financial Statements, Fiscal Years 2006 and 2007 ($000s) 2006 2007 Income Statements Net sales $4,725 $ 5,075 Cost of goods sold Beginning inventory 700 788 Purchases 2,538 2,713 Ending inventory Net cost of goods sold Gross profit Operating expense Interest expense Net income before taxes 875 1,050 2,363 $2,363 2,450 $ 2,625 $ 1,444 $1,400 88 105 $ 875 $ 1,076 Income taxes 350 431 Net income $ 525 $ 645 Balance Sheets Cash $ 88 2$ 88 Accounts receivable, net 525 612 1,050 1,750 Inventory 875 Current assets 1,488 Property, net 262 280 Total assets $1,750 $2,030 (continued)
Transcribed Image Text:EXHIBIT C4.1 Office Smart and Industry Significant Ratios Office Smart (for 2007) Industry Current ratio 1.52 2.1 Quick ratio 0.61 1.8 Debt ratio (%) 65.5 65.9 Inventory turnover (times) 2.3 37.3* Receivables turnover (times)** 8.3 7.4 Asset turnover (times) 2.5 3.2 Return on equity (%) 92.1 78.0 Return on sales (%) 12.7 8.4 *Results in published sources show significant variation; the reported result is the mean of three asset- size categories. ** Equivalent to 44 days in accounts receivable. EXHIBIT C4.2 Financial Statements, Fiscal Years 2006 and 2007 ($000s) 2006 2007 Income Statements Net sales $4,725 $ 5,075 Cost of goods sold Beginning inventory 700 788 Purchases 2,538 2,713 Ending inventory Net cost of goods sold Gross profit Operating expense Interest expense Net income before taxes 875 1,050 2,363 $2,363 2,450 $ 2,625 $ 1,444 $1,400 88 105 $ 875 $ 1,076 Income taxes 350 431 Net income $ 525 $ 645 Balance Sheets Cash $ 88 2$ 88 Accounts receivable, net 525 612 1,050 1,750 Inventory 875 Current assets 1,488 Property, net 262 280 Total assets $1,750 $2,030 (continued)
EXHIBIT C4.2 (Continued) 2006 2007 Balance Sheets (cont.) $ 420 Notes payable, bank Accounts payable Accrued expenses 525 298 350 875 437 Current liabilities $ 1,155 Long-term debt 175 175 Total liabilities $1,750 $ 1,330 Net worth 700 700 Total liabilities and net worth $1,750 $ 2,030
Transcribed Image Text:EXHIBIT C4.2 (Continued) 2006 2007 Balance Sheets (cont.) $ 420 Notes payable, bank Accounts payable Accrued expenses 525 298 350 875 437 Current liabilities $ 1,155 Long-term debt 175 175 Total liabilities $1,750 $ 1,330 Net worth 700 700 Total liabilities and net worth $1,750 $ 2,030
Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 2 steps

SEE SOLUTIONCheck out a sample Q&A here
Blurred answer
Knowledge Booster
Credit Analysis
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.
Recommended textbooks for you
FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
Accounting
ISBN:
9781259964947
Author:
Libby
Publisher:
MCG
Accounting
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education
SEE MORE TEXTBOOKS