Homework 1E Activity and Leverage Ratios
Question 1
Canadian Bacon Inc. financial statements are presented in the table below.
Based on the information in the table, calculate the firm’s inventory turnover ratio.
Round the answers to two decimal places
Balance Sheet December 31, 2012
Cash and marketable
$198,000 Accounts payable $288,000
securities
Accounts receivable $469,000 Notes payable $65,000
Inventories $577,000 Accrued expenses $84,000
Prepaid expenses $15,700 Total current liabilities $437,000
Total current assets $1,259,700 Long-term debt $237,000
Par value and paid-in-
Gross fixed assets $1,954,000 $199,000
capital
Less: accumulated
$476,000 Retained Earnings $1,864,700
depreciation
Net fixed assets $1,478,000 Common Equity 2,063,700
Total liabilities and
Total assets $2,737,700 $2,737,700
owner’s equity
Income Statement, Year of 2012
Net sales (all credit) $7,546,600.00
Less: Cost of goods sold $6,112,746.00
Selling and administrative
$349,000.00
expenses
Depreciation expense $145,000.00
EBIT $939,854.00
Interest expense $49,500.00
Earnings before taxes $890,354.00
Income taxes $356,141.60
Net income $534,212.40
Answer: 10.59
This study source was downloaded by 100000872281541 from CourseHero.com on 09-23-2023 15:27:04 GMT -05:00
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, Firm's Current Ratio Inventory Turnover Ratio
Cost of Goods Sold $ 6,112,746.00
$ 10.59
Inventory $ 577,000
Question 2
Canadian Bacon Inc. financial statements are presented in the table below.
Based on the information in the table, calculate the firm’s accounts receivable turnover ratio.
Round the answers to two decimal places
Balance Sheet December 31, 2013
Cash and marketable
$112,000 Accounts payable $211,000
securities
Accounts receivable $325,000 Notes payable $51,500
Inventories $426,000 Accrued expenses $50,100
Prepaid expenses $10,700 Total current liabilities $312,600
Total current assets $873,700 Long-term debt $225,000
Par value and paid-in-
Gross fixed assets $1,514,000 $117,000
capital
Less: accumulated
$315,000 Retained Earnings $1,418,100
depreciation
Net fixed assets $1,199,000 Common Equity 1,535,100
Total liabilities and
Total assets $2,072,700 $2,072,700
owner’s equity
Income Statement, Year of 2013
Net sales (all credit) $3,256,600.00
Less: Cost of goods sold $2,572,714.00
Selling and administrative
$323,000.00
expenses
Depreciation expense $115,000.00
EBIT $245,886.00
Interest expense $29,600.00
Earnings before taxes $216,286.00
This study source was downloaded by 100000872281541 from CourseHero.com on 09-23-2023 15:27:04 GMT -05:00
https://www.coursehero.com/file/56306271/FINC-330-Week-1-Homework-1E-Activity-and-Leverage-Ratiosdocx/
Question 1
Canadian Bacon Inc. financial statements are presented in the table below.
Based on the information in the table, calculate the firm’s inventory turnover ratio.
Round the answers to two decimal places
Balance Sheet December 31, 2012
Cash and marketable
$198,000 Accounts payable $288,000
securities
Accounts receivable $469,000 Notes payable $65,000
Inventories $577,000 Accrued expenses $84,000
Prepaid expenses $15,700 Total current liabilities $437,000
Total current assets $1,259,700 Long-term debt $237,000
Par value and paid-in-
Gross fixed assets $1,954,000 $199,000
capital
Less: accumulated
$476,000 Retained Earnings $1,864,700
depreciation
Net fixed assets $1,478,000 Common Equity 2,063,700
Total liabilities and
Total assets $2,737,700 $2,737,700
owner’s equity
Income Statement, Year of 2012
Net sales (all credit) $7,546,600.00
Less: Cost of goods sold $6,112,746.00
Selling and administrative
$349,000.00
expenses
Depreciation expense $145,000.00
EBIT $939,854.00
Interest expense $49,500.00
Earnings before taxes $890,354.00
Income taxes $356,141.60
Net income $534,212.40
Answer: 10.59
This study source was downloaded by 100000872281541 from CourseHero.com on 09-23-2023 15:27:04 GMT -05:00
https://www.coursehero.com/file/56306271/FINC-330-Week-1-Homework-1E-Activity-and-Leverage-Ratiosdocx/
, Firm's Current Ratio Inventory Turnover Ratio
Cost of Goods Sold $ 6,112,746.00
$ 10.59
Inventory $ 577,000
Question 2
Canadian Bacon Inc. financial statements are presented in the table below.
Based on the information in the table, calculate the firm’s accounts receivable turnover ratio.
Round the answers to two decimal places
Balance Sheet December 31, 2013
Cash and marketable
$112,000 Accounts payable $211,000
securities
Accounts receivable $325,000 Notes payable $51,500
Inventories $426,000 Accrued expenses $50,100
Prepaid expenses $10,700 Total current liabilities $312,600
Total current assets $873,700 Long-term debt $225,000
Par value and paid-in-
Gross fixed assets $1,514,000 $117,000
capital
Less: accumulated
$315,000 Retained Earnings $1,418,100
depreciation
Net fixed assets $1,199,000 Common Equity 1,535,100
Total liabilities and
Total assets $2,072,700 $2,072,700
owner’s equity
Income Statement, Year of 2013
Net sales (all credit) $3,256,600.00
Less: Cost of goods sold $2,572,714.00
Selling and administrative
$323,000.00
expenses
Depreciation expense $115,000.00
EBIT $245,886.00
Interest expense $29,600.00
Earnings before taxes $216,286.00
This study source was downloaded by 100000872281541 from CourseHero.com on 09-23-2023 15:27:04 GMT -05:00
https://www.coursehero.com/file/56306271/FINC-330-Week-1-Homework-1E-Activity-and-Leverage-Ratiosdocx/
