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3 years ago

The financial statements of Hainz Company appear below:

Business

1 answer:

Iteru [2.4K]3 years ago

7 0

Answer:

(1) 2.33 (2)11.42857 times (3) 31.9375 days (4) 3.846154 times (5) 87.6 days (6) 6.00 times (7) 15.75% (8) 1 times (9) 0.35 (10) 14%

Explanation:

Solution

(1) Current ratio:

Current Ratio = Current Asset / Current Liability = =140000/60000 = 2.33

(2) The return of common equity of stockholders:

Accounts receivable turnover ratio = the net credit sales/ average accounts receivable = $400000/$35000

11.42857 times

(3) Accounts collection period = 365/Accounts receivable turnover ratio =365/11.42857

31.9375 days

(4) Test acid ratio:

The Inventory Ratio Turnover = Cost of Goods Sold/Average Inventory

= $2,50,000/$65000

3.846154 times

(5) Average day to sell inventory = Inventory/Cost of Sales *365

=60000/250000*365

87.6 days

(6) The interest earned times:

Times Interest Earned = (Income before taxes and interest)/interest expense

= ($90000+18000)/18000

= 6.00 times

(7)The Profit Margin = Net Income / Sales

= 63000/400000

=15.75%

(8) The asset Turnover = Sales or Revenues / Total Assets

= $400000/400000 = 1 times

(9) Debt to asset ration = Total Liability / Total asset

= $140000/$400000

=0.35

(10)The return on asset ratio = Net Income/Average total asset

= 63000/450000 =14%

Now,

The total current assets = total assets - Net property, plant, equipment = $400000-$260000 = $140000

The Total current liabilities = [accounts payable + notes payable] $20000 + 40000 = $60000

The Average Account Receivable = (Opening Debtors+Closing Debtors)/2 = ($30000+$40000)/2 = $35000

The Average Inventory = (Opening Inventory+Closing Inventory)/2 = ($70000+$60000)/2 = $65000

Long-term debt + Equity = Total liabilities and equity – Total current liabilities = $275.00 – 65 = $201.00

The Total liability = Accounts Payable+ Notes Payable+Bonds Payable = $20000+40000+80000 = 140000

The Average Total asset = (Total opening asset+ total closing asset)/2 = ($400000+$500000)/2 = $4,50,000

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