ll MetroPCS 952 PM eztomheducationcom Spring 2018 ACCTG 101

.\'ll MetroPCS? 9:52 PM ezto.mheducation.com Spring 2018 ACCTG 101 Financial Accounting: Sp 2018 Accounting 101 T # 1195 ACCOUNTING er 12 Homework Problems Questions 15-16 (of 16) ? [The following information applies to the questions Income statement and balance sheet data for Great below GREAT ADVENTURES, INC. Income Statement For the Year Ended December 31, 2020 Service revenue (clinic, racing, TEAM) Sales revenue (MU watches) $525,000 00,000 Total revenues $625,000 Expenses: 61,000 303.376 41,000 28,824 51,600 Cost of goods sold (MU watches) Operating expenses Interest expense Income tax expense Total expenses 485,800 Net income $139,200

Solution

1 Risk ratios for 2020: a. Receivables turnover ratio Sales / Average Accounts receivable= 625000 / 28750 21.74 times Average Accounts receivable = (31500 + 26000) / 2 = 28750 b. Average collection period 365 days / Receivables turnover ratio = 365 / 21.74 16.79 days c. Inventory turnover Cost of goods sold / Average inventory = 61000 / 14375 4.24 times Average inventory = (15650 + 13100) / 2 = 14375 d. Average days in inventory 365 days /Inventory turnover ratio = 365 / 4.24 86.08 days e. Current ratio Current Assets / Current Liabilities = 360514 / 62910 5.73 to 1 f. Acid test ratio (CA - Inventory)/CL = (360514 - 15650) / 62910 = 344864 / 62910 5.48 to 1 g. Debt to equity ratio Total debt / Total stockholders\' equity = (62910 + 397964) / 1291640 = 460874 / 1291640 35.68 % h. Times interest earned Profit before interest & tax / Interest = (139200 + 28824 + 51600) / 28824 7.62 times 2 Profitability ratios for 2020: a. Gross profit ratio (on MU watches) Gross profit / Sales = (100000 - 61000) / 100000 = 39000 / 100000 39.00 % b. Return on Assets Net income / Average total assets = 139200 / 981857 14.18 % Average total assets = (1752514 + 211200) / 2 = 981857 c. Profit Margin Net income / Sales = 139200 / 625000 22.27 % d. Asset Turnover Sales / Average total assets = 625000 / 981857 0.64 times e. Return on Equity Net income / Average stockholders\' equity = 139200 / 717540 10.78 % Average stockholders\' equity = (143440 + 1291640) / 2 = 717540