Presented here are an incomplete income statement and balance sheet for Schwenke Corporation. Additional information: 1. The

Question:

Presented here are an incomplete income statement and balance sheet for Schwenke Corporation.

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Additional information:

1. The gross profit margin is 40%.

2. The income tax rate is 20%.

3. The inventory turnover is 8 times.4. The current ratio is 3:1.

5. The asset turnover is 1.5 times.

Instructions

Calculate the missing information using the ratios. Use ending balances instead of average balances, where averages are required for ratio calculations. Show your calculations.

Taking It Further

Why is it not possible to calculate the missing amounts in the same sequence (i.e., (a), (b), (c), etc.) that they are presented above?

Asset Turnover
Asset turnover is sales divided by total assets. Important for comparison over time and to other companies of the same industry. This is a standard business ratio.
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Related Book For  book-img-for-question

Accounting Principles Volume 2

ISBN: 978-1119502555

8th Canadian Edition

Authors: Jerry J. Weygandt, Donald E. Kieso, Paul D. Kimmel, Barbara Trenholm, Valerie Warren, Lori Novak

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