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Chapter 2: 19BP (page 81)
Martin Electronics has an accounts receivable turnover equal to 15 times. If accounts receivable are equal to $80,000, what is the value for average daily credit sales?
The average daily credit sales is $3,288.
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The following information is from Harrelson Inc.鈥檚 financial statements. Sales (all credit) were $28.50 million for last year.
Sales to total assets | 1.90 times |
Total debts to total assets | 35% |
Current ratio | 2.50 times |
Inventory turnover | 10.00 times |
Average collection period | 20 days |
Fixed assets turnover | 5.00 times |
Fill in the balance sheet:
Cash | Current debts | ||
Account receivable | Long term debts | ||
Inventory | Total debts | ||
Total current assets | Equity | ||
Fixed assets | |||
Total assets | Total debts and equity |
Wright Lighting Fixtures forecasts its sales in units for the next four months as follows:
March | 4,000 |
April | 10,000 |
May | 8,000 |
June | 6,000 |
Wright maintains an ending inventory for each month in the amount of one and one-half times the expected sales in the following month. The ending inventory for February (March鈥檚 beginning inventory) reflects this policy. Materials cost \(7 per unit and are paid for in the month after production. Labor cost is \)3 per unit and is paid for in the month incurred. Fixed overhead is \(10,000 per month. Dividends of \)14,000 are to be paid in May. Eight thousand units were produced in February.
Complete a production schedule and a summary of cash payments for
March, April, and May. Remember that production in any one month is equal to
sales plus desired ending inventory minus beginning inventory.
The Rogers Corporation has a gross profit of \(880,000 and \)360,000 in depreciation expense. The Evans Corporation also has \(880,000 in gross profit,
with \)60,000 in depreciation expense. Selling and administrative expense is $120,000 for each company. Given that the tax rate is 40 percent, compute the cash flow for both companies.
Explain the difference in cash flow between the two firms.
What is the difference between accumulated depreciation and depreciation expense? How are they related?
Arrange the following income statement items so they are in the proper order of an income statement:
Taxes | Earning per share |
Share Outstanding | Earning before taxes |
Interest Expense | Cost of goods sold |
Depreciation Expense | Earning after taxes |
Preferred Stcok dividends | Earning available to common stockholders |
Sales | Selling and administrative expense |
Gross profit |
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