Problem 1
The balance sheet for the Bryan Corporation is shown below. Sales for the year were $3,680,000, with 75 percent of sales sold on credit.
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BRYAN CORPORATION
Balance Sheet 201X
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Assets
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Liabilities and Stockholders' Equity
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Cash
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$
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21,000
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Accounts payable
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$
|
222,000
|
|
Accounts receivable
|
|
324,000
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Accrued taxes
|
|
93,000
|
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Inventory
|
|
244,000
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Bonds payable (long-term)
|
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194,000
|
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Plant and equipment
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461,000
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Common stock
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100,000
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|
|
|
|
|
|
|
|
|
|
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Paid-in capital
|
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150,000
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|
|
|
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Retained earnings
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|
291,000
|
|
|
|
|
|
|
|
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Total assets
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$
|
1,050,000
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Total liabilities and
stockholders' equity
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$
|
1,050,000
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|
|
|
|
|
|
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Compute the following ratios
(a) Current ratio
(b) Quick ratio
(c) Debt-to-total-assets ratio
(d) Asset turnover
(e) Average collection period days
Problem 2
Using the income statement for J. Lo Wedding Gowns, compute the following ratios:
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J. LO WEDDING GOWNS
Income Statement
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Sales
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$
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281,000
|
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Less: Cost of goods sold
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|
169,000
|
|
|
|
|
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Gross profit
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|
112,000
|
|
Less: Selling and administrative expense
|
|
44,800
|
|
Less: Lease expense
|
|
17,500
|
|
|
|
|
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Operating profit*
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$
|
49,700
|
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Less: Interest expense
|
|
8,100
|
|
|
|
|
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Earnings before taxes
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$
|
41,600
|
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Less: Taxes (30%)
|
|
16,640
|
|
|
|
|
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Earnings after taxes
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$
|
24,960
|
|
|
|
|
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*Equals income before interest and taxes.
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|
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(a) Compute the interest coverage ratio.
(b) Compute the fixed charge coverage ratio.
(c) The total assets for this company equal $211,000. Compute the return on assets (investment).