Chapter 2: 12BP (page 115)
At the end of January, Higgins Data Systems had an inventory of 650 units, which cost
The cost of goods sold of the company assuming LIFO inventory accounting method is $21,250.
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Baker Oats had an asset turnover of 1.6 times per year.
b. The following year, on the same level of assets, Baker’s assets turnoverdeclined to 1.4 times and its profit margin was 8 percent. How did the returnon total assets change from that of the previous year?
Prepare an income statement for Virginia Slim Wear. Take your calculations all the way to computing earnings per share.
Sales | 1,360,000 |
Shares outstanding | 104,000 |
Cost of goods sold | 700,000 |
Interest expenses | 34,000 |
Selling and administration expenses | 49,000 |
Depreciation expenses | 23,000 |
Preferred stock dividend | 86,000 |
Taxes | 100,000 |
Indicate if there is an improvement or decline in total asset turnover, and based on the other ratios, indicate why this development has taken place.
The balance sheet for Stud Clothiers is shown below. Sales for the year were \(2,400,000, with 90 percent of sales sold on credit.
Stud Clothier | |||
Balance sheet 20X1 | |||
Assets | Liabilities and Equity | ||
Cash | \)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 |
Compute the following:
a. Current ratio
Billy’s Crystal Stores Inc. has assets of $5,960,000 and turns over its assets 1.9 times per year. Return on assets is 8 percent. What is the firm’s profit margin (return on sales)?
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