Interm. Chapter 5 Case

Interm. Chapter 5 Case - Saikat Mitra Chapter 5 Integrating...

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Saikat Mitra Chapter 5 Integrating Case Integrating Case 5-23 Calculations ($ in 000s): a. Profit margin on sales = Net income ÷ Sales = 5% Sales = $15 ÷ 5% = $300 b. Return on assets = Net income ÷ Total assets = 7.5% Total assets = $15 ÷ 7.5% = $200 c. Gross profit margin = Gross profit ÷ Sales = 40% Gross profit = $300 x 40% = $120 Cost of goods sold = Sales – Gross profit = $300 – 120 = $180 d. Inventory turnover ratio = Cost of goods sold ÷ Inventory = 6 Inventory = $180 ÷ 6 = $30 e. Receivables turnover ratio = Sales ÷ Accounts receivable = 25 Accounts receivable = $300 ÷ 25 = $12 f. Acid-test ratio = Cash + AR + ST Investments ÷ Current liabilities = .9 Current liabilities = ($15 + 12 + 0) ÷.9 = $30 g. Accounts payable = Current liabilities – Short-term notes = $30 – 5 = $25 h. Current ratio = Current assets ÷ Current liabilities = 2 Current assets = $30 x 2 = $60 Balance Sheet Assets Cash $ 15,000 given Accounts receivable (net) 12,000 (e) Inventory 30,000 (d)
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Interm. Chapter 5 Case - Saikat Mitra Chapter 5 Integrating...

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