Problem: Maury Company has these comparative balance sheet data:
MAURY COMPANY
Balance Sheets
December 31
2007 2006
Cash $ 25,000 $ 30,000
Receivables (net) 65,000 60,000
Inventories 60,000 50,000
Plant assets (net) 200,000 180,000
$350,000 $320,000
Accounts payable $ 55,000 $ 60,000
Mortgage payable (15%) 100,000 100,000
Common stock, $10 par 135,000 120,000
Retained earnings 60,000 40,000
$350,000 $320,000
Additional information for 2007:
1. Net income was $25,000.
2. Sales on account were $400,000. Sales returns and allowances amounted to $25,000.
3. Cost of goods sold was $198,000.
4. Net cash provided by operating activities was $48,000.
5. Capital expenditures were $25,000, and cash dividends were $18,000.
Instructions:
Compute the following ratios at December 31, 2007.
(a) Current. (e) Days in inventory.
(b) Receivables turnover. (f) Cash debt coverage.
(c) Average collection period. (g) Current cash debt coverage.
(d) Inventory turnover. (h) Free cash flow.