U eztomheducationcomhmtpx The balance sheet for Stud Clothie

U ezto.mheducation.com/hm.tpx The balance sheet for Stud Clothiers is shown next Sales for the year were $3,510,000, with 75 percent of sales sold on credit. Balance Sheet 20X1 Assets Liabilities and Equity s 39,000 Accounts payable 297,0002 d Cash Accounts receivable Inventory Plant and equipment 304,000 294,000 488,000 Accrued taxes Bonds payable (long-term) Common stock 128,000 122,000 100,000 Paid-in capital Retained earnings 150,000 328,000 $ 1,125,000 $ 1,125,000 Tal liabilities and equity Total liabilities and equity Total assets Compute the following ratios: (Use a 360-day year. Do not round intermediate calculations. Round your answers to 2 decimal places. Input your debt-to-total assets answer as decimal places.) a percent rounded to 2 Answer is complete but not entirely correct. 1.50times 81.70 times a. Current ratio Quick ratio Debt-to-total-assets ratio 3.12 times 41.57days d Asset turnover Average collection period

Solution

a. Current ratio = Current asset / Current liability

=637,000/425000= 1.50 times

b.Quick ratio =( Current asset -Inventory)/ Current liability

=343000/425000= .81 times

c.Debt to total asset ratio= Total debt / Total asset

=547000/1125000 = .49

d.Asset turn over ratio =Turnover / Total asset

=3510,000/1125000= 3.12 times

e.Average collection period = Account receivable / Net credit sale per day

=304000/[3510,000*75%360]

=304000/7312.5

=41.57 days