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FINANCIAL STATEMENT

CURRENT YEAR PRECEDING YEAR

BALANCE SHEET

CASH $15,000. $20,000.

SHORT-TERM INVESTMENTS 11,000. 27,000.

NET ACCOUNTS RECEIVABLE 54,000. 73,000.

MERCHANDISE INVENTORY 77,000. 69,000.

PREPAID EXPENSES 15,000. 9,000.

TOTAL CURRENT ASSETS 172,000. 198,000.

TOTAL CURRENT LIABILITIES 133,000. 93,000.

INCOME STATEMENT

NET CREDIT SALES $462,000.

COGS 315,000.

1. Compute the ratios for the current year a. Currentratio b. Cash ratio c. Acid-test ratio d. Investment turnover e.Days sales in inventory (84 days) f. Days sales in receivables g.Gross profit percentage.

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Jamar Ferry
Jamar FerryLv2
28 Sep 2019

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Use the information from the balance sheet and income statementin the popup? window, LOADING...?, to calculate the following?ratios: a. Current ratio b.? Acid-test ratio c. Times interestearned d. Inventory turnover e. Total asset turnover f. Operatingprofit margin g. Days in receivables h. Operating return on assetsi. Debt ratio j. Fixed asset turnover k. Return on equity

Balance Sheet ASSETS

Cash $93,000

Accounts receivable 40,000

Inventory 46,000

Prepaid expenses 11,000

Total current assets $190,000

Gross plant and equipment 397,000

Accumulated depreciation (63,000)

Total assets $524,000

LIABILITIES AND OWNERS' EQUITY

Accounts payable $95,000

Accrued liabilities 67,000

Total current liabilities $162,000

Long-term debt 125,000

Common stock 206,000

Retained earnings 31,000

Total liabilities and equity $524,000

Income Statement Sales* $217,000

Cost of goods sold (89,000)

Gross profit $128,000

Selling, general, and administrative expenses (32,000)

Depreciation expenses (29,000)

Operating income $67,000 Interest expense (14,000)

Earnings before taxes $53,000

Taxes (21,200)

Earnings available to common shareholders $31,800

* 12% of sales are cash sales.

Integrative Problem Presented here are a statement of income and retained earnings and comparative balance sheets for Gallagher, Inc., which operates a national chain of sporting goods stores. Gallagher, Inc. Statement of Income and Retained Earnings For the Year Ended December 31, 2016 (all amounts in thousands of dollars)

Net sales $48,000

Cost of goods sold 36,000

Gross profit $12,000

Selling, general, and administrative expense 6,000

Operating income $6,000

Interest expense 280

Income before tax $5,720

Income tax expense 2,280

Net income $3,440

Preferred dividends 100 Income available to common $3,340

Common dividends 500 To retained earnings $2,840

Retained earnings, 1/1 12,000

Retained earnings, 12/31 $14,840

Gallagher, Inc. Comparative Balance Sheets December 31, 2016 and 2015 (all amounts in thousands of dollars) December 31 2016 2015

Cash $840 $2,700

Accounts receivable 12,500 9,000

Inventory 8,000 5,500

Prepaid insurance 100 400

Total current assets $21,440 $17,600

Land $4,000 $4,000

Buildings and equipment 12,000 9,000

Accumulated depreciation (3,700) (3,000)

Total long-term assets $12,300 $10,000

Total assets $33,740 $27,600

Accounts payable $7,300 $5,000

Taxes payable 4,600 4,200

Notes payable 2,400 1,600

Current portion of bonds 200 200

Total current liabilities $14,500 $11,000

Bonds payable 1,400 1,600

Total liabilities $15,900 $12,600

Preferred stock, $5 par $1,000 $1,000

Common stock, $1 par 2,000 2,000

Retained earnings 14,840 12,000

Total stockholders’ equity $17,840 $15,000

Total liabilities and stockholders’ equity $33,740 $27,600

Required: 1. Prepare a statement of cash flows for Gallagher, Inc., for the year ended December 31, 2016, using the indirect method in the Operating Activities section of the statement. If an answer is zero, please enter zero ("0"). Use the minus sign to indicate cash outflows, a decrease in cash, or cash payments. Gallagher, Inc. Statement of Cash Flows For The Year Ended December 31, 2016 (In Thousands of Dollars)

Cash flows from operating activities $

Adjustments to reconcile net income to net cash provided by operating activities:

Net cash provided by operating activities $

Cash flows from investing activities $

Net cash used by investing activities $

Cash flows from financing activities $

Net cash provided by financing activities $

$

Cash balance, December 31, 2015

Cash balance, December 31, 2016 $

2. Gallagher's management is concerned with its short-term liquidity and its solvency over the long run. To help management evaluate these, compute the following ratios, rounding all answers to two decimal points. For percentages, round to two decimal places before converting to a percentage. For example, 0.881 would be entered as 88. Assume 360 days per year.

a. Current ratio to 1

b. Acid-test ratio to 1

c. Cash flow from operations to current liabilities ratio %

d. Accounts receivable turnover ratio times

e. Number of days' sales in receivables days

f. Inventory turnover ratio times

g. Number of days' sales in inventory days

h. Debt-to-equity ratio to 1

i. Debt service coverage ratio to 1

j. Cash flow from operations to capital expenditures ratio % 3.

Selected year-end financial statements of Cabot Corporationfollow. (All sales were on credit; selected balance sheet amountsat December 31, 2012, were inventory, $51,900; total assets,$179,400; common stock, $105,000; and retained earnings,$52,148.)

CABOT CORPORATION
Income Statement
For Year Ended December 31, 2013
Sales $ 451,600
Costof goods sold 297,150
Gross profit 154,450
Operating expenses 99,300
Interest expense 4,700
Income before taxes 50,450
Income taxes 20,323
Netincome $ 30,127
CABOT CORPORATION
Balance Sheet
December 31, 2013
Assets Liabilities and Equity
Cash $ 20,000 Accounts payable $ 15,500
Short-term investments 9,000 Accrued wages payable 3,800
Accounts receivable, net 32,800 Income taxes payable 4,100
Notes receivable (trade)* 4,500 Long-term note payable, secured
Merchandise inventory 42,150 by mortgage on plant assets 65,400
Prepaid expenses 3,000 Common stock 105,000
Plant assets, net 147,300 Retained earnings 64,950
Total assets $ 258,750 Total liabilities and equity $ 258,750
* These areshort-term notes receivable arising from customer (trade)sales.
Required:

Compute the following: (1) current ratio, (2) acid-test ratio,(3) days' sales uncollected, (4) inventory turnover, (5) days'sales in inventory, (6) debt-to-equity ratio, (7) times interestearned, (8) profit margin ratio, (9) total asset turnover, (10)return on total assets, and (11) return on common stockholders'equity. (Use 365 days a year. Do not round intermediatecalculations.)

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