Assume you are an analyst evaluating Mesco Company. The following data are available in your financial analysis (unless otherwise indicated, all data are as of December 31, Year 5):
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Retained earnings, December 31, Year 4
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$98,000
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Days" sales in receivables
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18 days
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Gross profit margin ratio
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25%
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Shareholders" equity to total debt
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4 to 1
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Acid-test ratio
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2.5 to 1
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Sales (all on credit)
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$920,000
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Noncurrent assets
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$280,000
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Common stock: $15 par value; 10,000 shares issued
and outstanding; issued at $21 per share
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Days" sales in inventory.
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45 days
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Required:
Using these data, construct the December 31, Year 5, balance sheet for your analysis. Operating expenses (excluding taxes and cost of goods sold for Year 5) are $180,000. The tax rate is 40%. Assume a 360-day year in ratio computations. No cash dividends are paid in either Year 4 or Year 5. Current assets consist of cash, accounts receivable, and inventories.