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(Solution) -BUSI 320 Comprehensive Problem 1 Version B Use the following information to answer the questions on page 2 below: (note: all sales are credit sales)...


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The Question

BUSI 320 Comprehensive Problem 1 Version B

 

Use the following information to answer the questions on page 2 below:

 

(note: all sales are credit sales)

 


 

Income Stmt info: 2013 2014

 

Sales $ 1,100,000 $ 1,188,000

 

less Cost of Goods Sold: 450,000 481,500

 

Gross Profit 650,000 706,500

 

Operating Expenses 330,000 346,500

 

Earnings before Interest & Taxes 320,000 360,000

 

Interest exp 25,000 30,000

 

earnings before Taxes 295,000 330,000

 

Taxes 118,000 132,000

 

Net Income $ 177,000 $ 198,000

 


 

Balance Sheet info: 12/31/2013 12/31/2014

 

Cash 60,000 $ 72,000

 

Accounts Receivable 80,000 $ 81,600

 

Inventory 110,000 $ 135,000

 

Total Current Assets $ 250,000 $ 288,600

 

Fixed Assets (Net) $ 300,000 $ 315,000

 

Total Assets $ 550,000 $ 603,600

 


 

Current Liabilities $ 130,000 $ 139,100

 

Long Term Liabilities $ 150,000 $ 183,000

 

Total Liabilities $ 280,000 $ 322,100

 

Stockholder's Equity $ 270,000 $ 281,500

 

Total Liab & Equity: $ 550,000 $ 603,600

 


 


 


 


 


 

Compute each of the following ratios for 2013 and 2014 and

 

indicate whether each ratio was getting "better" or "worse" from 2013 to 2014

 

and was "good" or "bad" compared to the Industry Avg in 2014

 

(round all numbers to 2 digits past the decimal place)

 


 

2013 2014 Getting Better or Getting Worse? 2014 Industry Avg "Good" or "Bad" compared to Industry Avg

 

Profit Margin 0.11

 

Current Ratio 1.90

 

Quick Ratio 1.12

 

Return on Assets .28

 

Debt to Assets .55

 

Receivables turnover 18.00

 

Avg. collection period* 21.20

 

Inventory Turnover** 8.25

 

Return on Equity 0.55

 

Times Interest Earned 11.15

 


 

*Assume a 360 day year

 

**Inventory Turnover can be computed 2 different ways. Use the formula listed in the text

 

(the one the text indicates many credit reporting agencies generally use)

 


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(Solution) -BUSI 320 Comprehensive Problem 1 Version B Use the following information to answer the questions on page 2 below: (note: all sales are credit sales)....zip

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