Problem 3-14 Days’ Sales in Receivables

A company has net income of $188,000, a profit margin of 7.1 percent, and an accounts receivable balance of $127,370. Assuming 70 percent of sales are on credit, what is the company’s days’ sales in receivables? (Use 365 days a year. Do not round intermediate calculation and round your final answer to 2 decimal places. (e.g., 32.16))

   

  Days’ sales in receivables days  

 

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WorksheetProblem 3-14 Days’ Sales in Receivables

 

Problem 3-15 Ratios and Fixed Assets

The Le Bleu Company has a ratio of long-term debt to long-term debt plus equity of .31 and a current ratio of 1.70. Current liabilities are $870, sales are $6,290, profit margin is 8.7 percent, and ROE is 19.2 percent. What is the amount of the firm’s net fixed assets? (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16))

   

  Net fixed assets$   

 

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WorksheetProblem 3-15 Ratios and Fixed Assets

 

Problem 3-21 Calculating EFN

The most recent financial statements for Moose Tours, Inc., appear below. Sales for 2012 are projected to grow by 20 percent. Interest expense will remain constant; the tax rate and the dividend payout rate will also remain constant. Costs, other expenses, current assets, fixed assets, and accounts payable increase spontaneously with sales.

 

MOOSE TOURS, INC.

2011 Income Statement

  Sales$747,000 

  Costs582,000 

  Other expenses18,000 

 ________________________________________________________________________________ 

  Earnings before interest and taxes$147,000 

  Interest expense15,000 

 ________________________________________________________________________________ 

  Taxable income$132,000 

  Taxes 30%39,600 

 ________________________________________________________________________________ 

  Net income$92,400 

   ________________________________________________________________________________________________________________________________________________________________ 

    Dividends$18,480 

    Addition to retained earnings73,920 

________________________________________

 

MOOSE TOURS, INC.

Balance Sheet as of December 31, 2011

AssetsLiabilities and Owners’ Equity 

  Current assets  Current liabilities 

    Cash$20,640    Accounts payable$54,800 

    Accounts receivable32,960    Notes payable14,000 

    Inventory69,920________________________________________________________________________________ 

       Total$68,800 

 ________________________________________________________________________________________________________________________________________________________________ 

      Total$123,520  Long-term debt$130,000 

 ________________________________________________________________________________________________________________________________________________________________ 

  Fixed assets  Owners’ equity 

    Net plant and equipment$410,000    Common stock and paid-in surplus$116,000 

 ________________________________________________________________________________    Retained earnings218,720 

 ________________________________________________________________________________ 

       Total$334,720 

 ________________________________________________________________________________ 

  Total assets$533,520  Total liabilities and owners’ equity$533,520 

 ________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ 

________________________________________

 

If the firm is operating at full capacity and no new debt or equity is issued, what external financing is needed to support the 20 percent growth rate in sales? (Do not round intermediate calculations and round your final answer to the nearest whole dollar amount. (e.g., 32))

 

  External financing needed$   

 

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Problem 2-22 Financial Statements

Use the following information for Ingersoll, Inc., (assume the tax rate is 34 percent):

        

 20112012

  Sales $8,135   $8,709  

  Depreciation1,155  1,156  

  Cost of goods sold2,726  3,090  

  Other expenses669  564  

  Interest555  633  

  Cash4,139  5,233  

  Accounts receivable5,469  6,157  

  Short-term notes payable824  776  

  Long-term debt13,790  16,350  

  Net fixed assets34,755  35,637  

  Accounts payable4,376  4,215  

  Inventory9,700  9,968  

  Dividends986  1,081  

________________________________________

   

Prepare an income statement for this company for 2011 and 2012. (Do not round intermediate calculations. Round your answers to 2 decimal places. (e.g., 32.16))

      

Ingersoll, Inc.,

Income Statement

  20112012

  $  

 $   

 

   

    

 

      

    

 

    

    

 

 ________________________________________________________________________________

  $  

 $   

 

   

    

 

 ________________________________________________________________________________

  $  

 $   

 

   

    

 

 ________________________________________________________________________________

  $  

 $   

 

 ________________________________________________________________________________________________________________________________________________________________

  $  

 $   

 

   

    

 

________________________________________

     

Prepare a balance sheet of this company for 2011 and 2012. (Do not round intermediate calculations.Be sure to list the accounts in order of their liquidity.)

  

Prepare a balance sheet of this company for 2011 and 2012. (Be sure to list the accounts in order of their liquidity.)

  

Ingersoll, Inc.

Balance Sheet as of Dec. 31

 20112012

Assets

  $  

 $  

 

   

   

 

   

   

 

 ________________________________________________________________________________

  Current assets$  

 $  

 

   

   

 

 ________________________________________________________________________________

  Total assets$  

 $  

 

 ________________________________________________________________________________________________________________________________________________________________

Liabilities

  $  

 $  

 

   

   

 

 ________________________________________________________________________________

  Current liabilities$  

 $  

 

   

   

 

   

   

 

 ________________________________________________________________________________

  Total liabilities & owners’ equity$  

 $  

 

 ________________________________________________________________________________________________________________________________________________________________

________________________________________

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Problem 3-18 Common-Size and Common-Base Year Financial Statements

In addition to common-size financial statements, common–base year financial statements are often used. Common–base year financial statements are constructed by dividing the current year account value by the base year account value. Thus, the result shows the growth rate in the account.

  

Prepare the common-size balance sheet and common–base year balance sheet for the company. Use 2011 as the base year. (Do not round intermediate calculations. Round your common size answers to 2 decimal places. (e.g., 32.16) and common base year answers to 4 decimal places. (e.g., 32.1616))

   

 JARROW CORPORATION

 2011Common size2012Common sizeCommon base year 

 ________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

Assets 

  Current assets 

    Cash$8,814 

%$10,754 

% 

%

    Accounts receivable22,053 

%24,537 

% 

%

    Inventory38,422 

%43,397 

% 

%

 ________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

        Total$69,289 

%$78,688 

% 

%

  Fixed assets 

        Net plant and equipment$216,970 

%$244,940 

% 

 

 ________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

  Total assets$286,259 

%$323,628 

% 

%

 ________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

  Liabilities and Owners’ Equity 

  Current liabilities 

    Accounts payable$42,498 

%$47,484 

% 

%

    Notes payable19,064 

%18,635 

% 

%

 ________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

        Total$61,562 

%$66,119 

% 

%

  Long-term debt$25,600 

%$32,600 

% 

%

  Owners’ equity  

    Common stock and paid-in surplus$39,600 

%$40,800 

% 

%

    Retained earnings159,497 

%184,109 

% 

%

 ________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

        Total$199,097 

%$224,909 

% 

%

 ________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

  Total liabilities and owners’ equity$286,259 

%$323,628 

% 

%

 ________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

________________________________________

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