Table 1
Smith Company Balance Sheet and selected Income Statement data
Assets:
Cash and marketable securities $300,000
Accounts receivable 2,215,000
Inventories 1,837,500
Prepaid expenses 24,000
Total current assets $3,286,500
Fixed assets 2,700,000
Less: accumulated depreciation 1,087,500
Net fixed assets $1,612,500
Total assets $4,899,000
Liabilities:
Accounts payable $240,000
Notes payable 825,000
Accrued taxes 42,500
Total current liabilities $1,107,000
Long-term debt 975,000
Owner's equity 2,817,000
Total liabilities and owner's equity $4,899,000
Net sales (all credit) $6,375,000
Less: Cost of goods sold 4,312,500
Selling and administrative expense 1,387,500
Depreciation expense 135,000
Interest expense 127,000
Earnings before taxes $412,500
Income taxes 225,000
Net income $187,500
Common stock dividends $97,500
Change in retained earnings $90,000
Based on the information in Table 1, the current ratio is
A) 2.97.
B) 1.46.
C) 2.11.
D) 2.23.
Based on the information in Table 1, the average collection period is
A) 71 days.
B) 84 days.
C) 64 days.
D) 127 days.
Based on the information in Table 1, the debt ratio is
A) 0.70.
B) 0.20.
C) 0.74.
D) 0.42.
Based on the information in Table 1, the net profit margin is
A) 4.61%.
B) 2.94%.
C) 1.97%.
D) 5.33%.
Based on the information in Table 1, the inventory turnover ratio is
A) 0.29 times.
B) 2.35 times.
C) 0.43 times.
D) 3.47 times.
