34BP_b We are given the following infor... [FREE SOLUTION]

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Foundations Of Financial Management

Stanley B. Block, Geoffrey A. Hirt, Bartley Danielsen

Business Studies

16th Edition 路 768 pages

ISBN: 9781259277160

Chapter 2: 34BP_b (page 86)

We are given the following information for the Pettit Corporation.
Sales (credit)
$3,549,000
Cash
179,000
Inventory
911,000
Current liabilities
788,000
Assets turnover
1.40 times
Current ratio
2.95 times
Debt-to-assets ratio
40%
Receivables turnover
7 times
Current assets are composed of cash, marketable securities, accounts receivable, and inventory. Calculate the following balance sheet items.
b. Marketable securities.

Short Answer

Expert verified

The marketable securities of the company are $727,600.

Step by step solution

Current assets

$\begin{array}{rcl} Current asstes & = & Current liabilities 脳 Current ratio \\ = & $ 788, 000 脳 2.95 \\ = & $ 2, 324, 600 \end{array}$

Marketable securities

$\begin{array}{rcl} Marketable securities & = & Current assets - Cash - Accounts receivable - Inventory \\ = & $ 2, 324, 600 - $ 179, 000 - $ 507, 000 - $ 911, 000 \\ = & $ 727, 600 \end{array}$

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Times mirror and glass company
Sales	\)126,000
Less: Cost of goods sold	93,000
Gross profit	\(33,000
Less: selling and administrative expenses	11,000
Lease Expenses	4,000
Operating profit*	\)18,000
Less: Interest expenses	3,000
Earning before taxes	\(15,000
Less: Taxes (30%)	4,500
Earning after taxes	\)10,500

Stud Clothier
Balance sheet 20X1
Assets		Liabilities and Equity
Cash	\)60,000	Account payable	\(220,000
Account receivable	240,000	Accrued taxes	30,000
Inventory	350,000	Bonds payable (long term)	150,000
Plant and equipment	410,000	Common stock	80,000
		Paid in capital	200,000
		Retained earnings	380,000
Total assets	\)1,060,000	Total LIbilities and Equity	$1,060,000

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Short Answer

Step by step solution

Current assets

Marketable securities

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Sales (credit)	$3,549,000
Cash	179,000
Inventory	911,000
Current liabilities	788,000
Assets turnover	1.40 times
Current ratio	2.95 times
Debt-to-assets ratio	40%
Receivables turnover	7 times