Ex. 195
Winter Corporation has issued ordinary shares only. The company has been successful and the gross profit is 20% of sales. The information shown below was taken from the company's financial statements.
Beginning inventory$ 482,000
Purchases5,636,000
Ending inventory?
Average accounts receivable700,000
Average ordinary shareholders' equity3,500,000
Sales revenue (all on credit)7,000,000
Net income525,000
Instructions
Compute the following:
(a)Accounts receivable turnover and the average collection period.
(b)Inventory turnover and the days in inventory.
(c)Return on ordinary shareholders' equity.
Ex. 196
Boyle Corporation had the following comparative current assets and current liabilities:
Dec. 31, 2014Dec. 31, 2013
Current assets
Prepaid expenses$ 35,000$ 20,000
Inventory 110,00090,000
Accounts receivable55,00095,000
Short-term investments40,00010,000
Cash 20,000 30,000
Total current assets$260,000$245,000
Current liabilities
Accounts payable$140,000$110,000
Salaries and wages payable40,00030,000
Income tax payable 20,000 15,000
Total current liabilities$200,000$155,000
During 2014, credit sales and cost of goods sold were $600,000 and $350,000, respectively.
Ex.196(Cont.)
Instructions
Compute the following liquidity measures for 2014:
1.Current ratio.
2.Working capital.
3.Acid-test ratio.
4.Accounts receivable turnover.
5.Inventory turnover.