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Financial ratios* As you can see, someone has spilled ink over some of the entries in the
- Long-term debt ratio: .4.
- Times-interest-earned: 8.0.
- Current ratio: 1.4.
- Quick ratio: 1.0.
- Cash ratio: .2.
- Inventory turnover: 5.0.
- Receivables collection period: 73 days. Tax rate = .4.
To determine: Various financial ratios to complete the balance sheet.
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 is $115
Therefore, total current liabilities is $55
Therefore, total current assets is $77
Hence, cash is $11
Therefore, accounts receivables is $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 is $39
Therefore, sales is $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
PRIN.OF CORPORATE FINANCE
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Managerial Accounting: The Cornerstone of Busines...AccountingISBN:9781337115773Author:Maryanne M. Mowen, Don R. Hansen, Dan L. HeitgerPublisher:Cengage Learning