Foundations of Financial Management
16th Edition
ISBN: 9781259277160
Author: Stanley B. Block, Geoffrey A. Hirt, Bartley Danielsen
Publisher: McGraw-Hill Education
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Chapter 3, Problem 22P
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The balance sheet for Revolution Clothiers is shown below. Sales for the year were $3,190,000, with 75 percent of sales sold on credit.
REVOLUTION CLOTHIERS
Balance Sheet 20X1
Assets
Cash
Accounts receivable
Inventory
Plant and equipment
Total assets
$ 24,000
283,000
266,000
450,000
a. Current ratio
b. Quick ratio
c. Debt-to-total-assets ratio
d. Asset turnover
e. Average collection period
$ 1,023,000
Accounts payable
Accrued taxes
Liabilities and Equity
times
times
%
times
days
Bonds payable (long-term)
Common stock
Paid-in capital
Retained earnings
Total liabilities and equity
Compute the following ratios:
Note: Use a 360-day year. Do not round intermediate calculations. Round your answers to 2 decimal places. Input your debt-to-
total assets answer as a percent rounded to 2 decimal places.
$ 279,000
107,000
130,000
100,000
150,000
257,000
$ 1,023,000
Consider the following company’s balance sheet and income statement.
For this company, calculate the following:
Current ratio.
Number of days’ sales in receivables.
Sales to total assets.
The following ratios have been computed for Pina Colada Company for 2010.
Profit margin 20% (net profit/revenue)
Times interest earned 15 times (income before interest expense and income taxes/interest expense)
Receivables turnover 5 times (net credit sales/average net receivables)
Acid-test ratio 1.60 : 1 (marketable net cash + securities + receivables/current liabilities)
Current ratio 3 : 1 (current assets/current liabilities)
Debt to total assets ratio 26% (total debts/total assets)
Pina Colada Company’s 2010 financial statements with missing information follow:
PINA COLADA COMPANY
Comparative Balance Sheet
December 31,
Assets 2010 2009
Cash P 25,000 P 35,000
Short-term Investments 15,000 15,000
Accounts receivable (net) ? (6)…
Chapter 3 Solutions
Foundations of Financial Management
Ch. 3 - If we divide users of ratios into short-term...Ch. 3 - Explain how the Du Pont system of analysis breaks...Ch. 3 - If the accounts receivable turnover ratio is...Ch. 3 - Prob. 4DQCh. 3 - Is there any validity in rule-of-thumb ratios for...Ch. 3 - Why is trend analysis helpful in analyzing ratios?...Ch. 3 - Inflation can have significant effects on income...Ch. 3 - What effect will disinflation following a highly...Ch. 3 - Why might disinflation prove favorable to...Ch. 3 - Comparisons of income can be very difficult for...
Ch. 3 - Low Carb Diet Supplement Inc. has two divisions....Ch. 3 - Database Systems is considering expansion into a...Ch. 3 - Prob. 3PCh. 3 - Prob. 4PCh. 3 - Prob. 5PCh. 3 - Dr. Zhivà€go Diagnostics Corp.’s income...Ch. 3 - The Haines Corp. shows the following financial...Ch. 3 - Easter Egg and Poultry Company has $2,000,000 in...Ch. 3 - Prob. 9PCh. 3 - Prob. 10PCh. 3 - Baker Oats had an asset turnover of 1.6 times per...Ch. 3 - AllState Trucking Co. has the following ratios...Ch. 3 - Front Beam Lighting Company has the following...Ch. 3 - Prob. 14PCh. 3 - Prob. 15PCh. 3 - Jerry Rice and Grain Stores has $4,780,000 in...Ch. 3 - Prob. 17PCh. 3 - Prob. 18PCh. 3 - Prob. 19PCh. 3 - Prob. 20PCh. 3 - Jim Short’s Company makes clothing for schools....Ch. 3 - The balance sheet for Stud Clothiers is shown...Ch. 3 - The Lancaster Corporation’s income statement is...Ch. 3 - Prob. 24PCh. 3 - Prob. 25PCh. 3 - Prob. 26PCh. 3 - Prob. 27PCh. 3 - Prob. 28PCh. 3 - The Global Products Corporation has three...Ch. 3 - Prob. 30PCh. 3 - Prob. 31PCh. 3 - Prob. 32PCh. 3 - Prob. 33PCh. 3 - Prob. 34PCh. 3 - The following information is from Harrelson...Ch. 3 - Using the financial statements for the Snider...Ch. 3 - Given the financial statements for Jones...
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- Juroe Company provided the following income statement for last year: Juroes balance sheet as of December 31 last year showed total liabilities of 10,250,000, total equity of 6,150,000, and total assets of 16,400,000. Required: 1. Calculate the return on sales. (Note: Round the percent to two decimal places.) 2. CONCEPTUAL CONNECTION Briefly explain the meaning of the return on sales ratio, and comment on whether Juroes return on sales ratio appears appropriate.arrow_forwardFINANCIAL RATIOS Based on the financial statements for Jackson Enterprises (income statement, statement of owners equity, and balance sheet) shown on pages 596597, prepare the following financial ratios. All sales are credit sales. The Accounts Receivable balance on January 1, 20--, was 21,600. 1. Working capital 2. Current ratio 3. Quick ratio 4. Return on owners equity 5. Accounts receivable turnover and average number of days required to collect receivables 6. Inventory turnover and average number of days required to sell inventoryarrow_forwardJuroe Company provided the following income statement for last year: Juroes balance sheet as of December 31 last year showed total liabilities of 10,250,000, total equity of 6,150,000, and total assets of 16,400,000. Required: Note: Round answers to two decimal places. 1. Calculate the times-interest-earned ratio. 2. Calculate the debt ratio. 3. Calculate the debt-to-equity ratio.arrow_forward
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