I'm having trouble figuring out a business question. It is as follows: Construct the current assets section of the balance sheet from the following data. (Use cash as a plug figure after computing the other values.) Yearly sales (credit................$720,000 Inventory turnover..................6 times Current liabilities....................$105,000 Current ratio.............................2 Average collection period.........35 days Current assets: Cash...........................................$ Accounts receivable.................... Inventory...................................... Total current assets.................... Another question The Griggs Corporation has a credit sales of $1,200,00. Given the following ratios, fill in the balance sheet below. Total assets turnover..................2.4 times Cash to total assets...................2.0% Accounts receivable turnover...........8.0 times Inventory turnover.....................10.0 times Current ratio..........................2.0 times Debt to total assets...................61.0% Griggs Corporation Balance Sheet 2004 Assets Cash....... Accounts receivable...... Inventory......... Total current assets........ Fixed assets........... Total assets Liabilities and Stockholders' Equity Current debt......... Long term debt....... Total debt......... Equity........ Total debt and stockholders' equity Questio: In January 1995 the Status Quo Company was formed. Total assets were $500,000, of which $300,000 consisted of depreciable fixed assets. Status Quo uses straightline depreciation and in 1995 it estimated its fixed assets to have useful lives of 10 years. Aftertax income has been $26,000 per year each of the last 10 years. Other assets have not changed since 1995. a. Compute return on assets at year end for 1995,1997,2000, 2002, and 2004 (Use $26,000 in the numerator for each year) b. To what do you attribute the phenomenon shown in part a? c. Now assume income increased by 10 percent each year. What effect would this have on your above answers? Optional Information: Gloucester, Virginia
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Please note that the first question you have posted is not complete. You cannot compute the inventroy figure unless you are given the figure for the cost of goods sold.
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This is the exact question that is in the textbook book for the first question. Is there anyway you can take a wag at it? Are you able to answer the next two...if so please do. Thank you for the update: HB
Maybe this will help for Question #1. Here is what I responded with on the discussion board in the class, but the answer I got back still doesn't make sense to me. The book states that we are to use cash as a plug figure. How do I figure Total Current Assets if I have no cash figure? This is what I received back for an Answer. Answer: To help you out a little bit, I know it says use cash as a plug figure, but the way I figured it out. I kind of worked backwards. I figured inventory first, then AR, then Total current assets then I pluged for Cash I hope this might help you, but like I said before can you take a wag at Question #1 and answer the other two for me. Thank You: HB
Relist: I still need help.
GRIGGS CORPORATION.Sales/total assets = 2.4 timesTotal assets = $1,200,000/2.4Total assets = $500,000 Cash = 2% of total assetsCash = 2% x $500,000Cash = $10,000 Sales/accounts receivable = 8 timesAccounts receivable = $1,200,000/8Accounts receivable = $150,000 Sales/inventory = 10 timesInventory = $1,200,000/10Inventory = $120,000 Fixed assets = Total assets - current assetsCurrent asset = $10,000 + $150,000 + $120,000 = $280,000Fixed assets = $500,000 - $280,000= $220,000 Current assets/current debt = 2Current debt = Current assets/2Current debt = $280,000/2Current debt = $140,000 Total debt/total assets = 61%Total debt = .61 x $500,000Total debt = $305,000Long-term debt = Total debt - current debtLong-term debt = $305,000 - 140,000Long-term debt = $165,000 Equity = Total assets - total debtEquity = $500,000 - $305,000Equity = $195,000Answer:Cash $10,000A/R $150,000Inventory $120,000Total current assets $280,000Fixed assets $220,000Total assets $500,000Current debt $140,000Long-term debt $165,000Total debt $305,000Equity $195,000Total debt and stockholders' equity $500,000STATUS QUO.a. Return on assets (investment) = Income after taxes/Total assets. The return on assets for Status Quo will increase over time as the assets depreciate and the denominator gets smaller. Fixed assets at the beginning of 1995 equal $300,000 with a ten-year life which means the depreciation expense will be $30,000 per year. Book values at year-end are as follows:1995 = $270,000;1997 = $210,000;2000 = $120,000;2002 = $60,000;2004 = -0-Return on assets (investment) 1995 = $26,000/$470,000 = 5.53%1997 = $26,000/$410,000 = 6.34%2000 = $26,000/$320,000 = 8.13%2002 = $26,000/$260,000 = 10.00% 2004 = $26,000/200,000 = 13.00%b. The increasing return on assets over time is due solely to the fact that annual depreciation charges reduce the amount of investment. The increasing return is in no way due to operations. Financial analysts should be aware of the effect of overall asset age on the return-on-investment ratio and be able to search elsewhere for indications of operating efficiency when ROI is very high or very low. c. As income rises, return on assets will be higher than in part (b) and would indicate an increase in return partially from more profitable operations.
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