FIN 323 Chapter 3
Aguilera Corp. has a current accounts receivable balance of $332,875. Credit sales for the year just ended were $4,207,540. What is the company's days' sales in receivables? How long did it take on average for credit customers to pay off their accounts during the past year?
Receivables turnover = Sales / Receivables Receivables turnover = $4,207,540 / $332,875 Receivables turnover = 12.64 times Days' sales in receivables = 365 days / Receivables turnover Days' sales in receivables = 365 / 12.64 Days' sales in receivables = 28.88 days On average, the company's customers paid off their accounts in 28.88 days.
SDJ, Inc., has net working capital of $2,810, current liabilities of $4,000, and inventory of $3,520. What is the current ratio?
Using the formula for NWC, we get: NWC = CA - CL CA = CL + NWC CA = $4,000 + 2,810 CA = $6,810 So, the current ratio is: Current ratio = CA / CL Current ratio = $6,810 / $4,000 Current ratio = 1.70 times
SDJ, Inc., has net working capital of $2,810, current liabilities of $4,000, and inventory of $3,520. What is the quick ratio?
Using the formula for NWC, we get: NWC = CA - CL CA = CL + NWC CA = $4,000 + 2,810 CA = $6,810 So, the current ratio is: Current ratio = CA / CL Current ratio = $6,810 / $4,000 Current ratio = 1.70 times And the quick ratio is: Quick ratio = (CA − Inventory) / CL Quick ratio = ($6,810 − 3,520) / $4,000 Quick ratio = .82 times
Aguilera Corp. has a current accounts receivable balance of $332,875. Credit sales for the year just ended were $4,207,540. What is the company's receivables turnover?
Receivables turnover = Sales / Receivables Receivables turnover = $4,207,540 / $332,875 Receivables turnover = 12.64 times
Shelton, Inc., has sales of $20 million, total assets of $18.2 million, and total debt of $9.1 million. Assume the profit margin is 9 percent. What is the company's net income?
We need to find net income first. So: Profit margin = Net income / Sales Net income = Profit margin(Sales) Net income = .09($20,000,000) Net income = $1,800,000
Shelton, Inc., has sales of $20 million, total assets of $18.2 million, and total debt of $9.1 million. Assume the profit margin is 9 percent. What is the company's ROA?
We need to find net income first. So: Profit margin = Net income / Sales Net income = Profit margin(Sales) Net income = .09($20,000,000) Net income = $1,800,000 ROA = Net income / TA ROA = $1,800,000 / $18,200,000 ROA = .0989, or 9.89%
Shelton, Inc., has sales of $20 million, total assets of $18.2 million, and total debt of $9.1 million. Assume the profit margin is 9 percent. What is the company's ROE?
We need to find net income first. So: Profit margin = Net income / Sales Net income = Profit margin(Sales) Net income = .09($20,000,000) Net income = $1,800,000 ROA = Net income / TA ROA = $1,800,000 / $18,200,000 ROA = .0989, or 9.89% To find ROE, we need to find total equity. Since TL & OE equals TA: TA = TD + TE TE = TA − TD TE = $18,200,000 − 9,100,000 TE = $9,100,000 ROE = Net income / TE ROE = $1,800,000 / $9,100,000 ROE = .1978, or 19.78%