Ivanhoe Medical manufactures hospital beds and other institu

Ivanhoe Medical manufactures hospital beds and other institutional furniture. The company\'s comparative balance sheet and income statement for 2015 and 2016 follow. Ivanhoe Medical Comparative Balance Sheet As of December 31 2016 2015 Assets Current assetS $359,000 $417,450 776,400 681,000 247,000 2,121,850 8,439,895 $11,227,395 $10,561,745 Accounts receivable, net Inventory Other current assets 1,014,000 736,000 381,350 2,490,350 8,737,045 Total current assets Property, plant, & equipment, net Total assets Liabilities and Stockholders\' Equity Current liabilities Long-term debt $3,167,000 3,702,600 6,869,600 58,950 104,650 ,194,195 4,357,795 $11,227,395 $2,846,000 3,892,600 6,738,600 58,950 103,850 ,660,345 3,823,145 $10,561,745 Total liabilities Preferred stock, $5 par value Common stock, $0.25 par value Retained earnings Total stockholders equity Total liabilities and stockholders\' equity Ivanhoe Medical Comparative Income Statement and Statement of Retained Earnings For the Year 2016 2015 Sales revenue (all on account Cost of goods sold Gross profit Operating expenses Net operating income Interest expense Net income before taxes Income taxes (30%) Net income Dividends paid $10,177,200 $9,613,950 5,298,800 4,315,150 ,634,150 1,681,000 308,650 1,372,350 411,705 $960,645 5,612,550 4,564,650 2,840,250 1,724,400 300,400 1,424,000 427,200 $996,800 29,500 Preferred dividends Common dividends Total dividends paid 433,450 462,950 533,850 ,660,345 $4,194,195 29,500 413,100 442,600 518,045 ,142,300 3,660,345 Net income retained Retained earnings, beginning of year Retained earnings, end of year

Solution

Answer

1.Working capital  = Total Current Asset - Total current liability

                            =2490350-3167000

                            = (676650)

2. Current Ratio  = Current Assets/Current liabilities

                           =2490350/3167000

                            =0.79

3. Acid Test Ratio      =(Current Assets – Inventory) / Current liabilities

                                    =(2490350-73600)/3167000

                                    =0.55

4. Accounts receivable turnover times    = Net credit sales/average account receivables

                                                                 =10177200/895200

                                                                =11.36 (0.36*365)

                                                                =11 year 128 days

                      (Wn1- Average account receivables =(opening receivables+closing receivables)/2

                                                                                =(776400+1014000)/2

                                                                                =895200)

5. Average collection period days    =Days*Average amount of account receivables/credit sales

                                                          =365*895200/10177200

                                                           =32.10

                                                           =Total days 32 days

6. Inventory turnover times= Cost of Goods Sold / Average Inventory

                                            =5612550/708500 (736000+681000/2 )

                                            =7.92