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To determine: Various financial ratios to complete the
Explanation of Solution
Given information:
Long term debt ratio is 0.4
Times-interest earned is 8.0
Current ratio is 1.4
Cash ratio is 0.2
Inventory turnover ratio is 5.0
Tax rate is 0.40
Quick ratio is 1.0
Calculation of financial ratios:
Therefore, total assets are $115
Therefore, total current liabilities are $55
Therefore, total current assets are $77
Hence, cash is $11
Therefore, accounts receivables are $44
Therefore, inventory is $22
Therefore, fixed assets are $38
Therefore, long-term debt and equity is $60
Therefore, long-term debt is $24
Therefore, equity is $36
For completing the balance sheet the following ratios are needed,
Therefore, average inventory is $24
Therefore, cost of goods sold is $120
Therefore, average receivables are $39
Therefore, sales are $195
Therefore, EBIT is $45.
Therefore, interest is $5.625
Therefore, interest is $39.375
Therefore, tax is $15.75
Therefore, company balance sheet is as follows,
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Chapter 28 Solutions
Principles of Corporate Finance (Mcgraw-hill/Irwin Series in Finance, Insurance, and Real Estate)
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Principles of Accounting Volume 1AccountingISBN:9781947172685Author:OpenStaxPublisher:OpenStax College