Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Case 2: Sams Paint and Drywall Sam's Paint and Drywall For the year ended December 31, 2019 (In thousands of dollars) Assets Liabilities and Net

Case 2: Sams Paint and Drywall

Sam's Paint and Drywall

For the year ended December 31, 2019

(In thousands of dollars)

Assets

Liabilities and Net Worth

Cash

$12

Accounts Payable

$15

Inventory

41

Notes Payable-Bank

4

Accounts Receivable

18

Other

20

Total Current Assets

71

Total Current Liabilities

39

Fixed Assets:

Long Term Liabilities

41

Vehicles

10

Equipment

15

Building

22

Land

23

Total net worth (Owners Equity)

61

Total fixed assets

70

Total Fixed

70

Total assets

$141

Total Liability and Net worth

$141

Income Statement for Dec. 31, 2019

(In thousands of dollars)

Sales 280

Less Cost of Goods Sold 186

Gross Margin on Sales 94

Less Operating Expenses 81

Net profit (before taxes) 13

Questions:

  1. Determine each of the 5 ratios listed in the table below. Note also that a list of ratios and the equations are included in this document (at the end).
  2. Evaluate each ratio against Dun and Bradstreets Key Business Ratios on industry norms (given on the following page).

Ratios to Calculate

Dunn & Bradstreet Avg.

  1. Current Ratio = Current Assets / Current Liabilities

2.7

  1. Inventory Turnover = Sales / Average Inventory

6.9

  1. Profit to Sales = Net Profit (B4 tax) / Gross Sales

3.5%

  1. Return on Investment = Net Profit (B4 Tax) / Owners Equity

21%

  1. Debt to Equity = Total Debt / Owners Equity

4.3 : 1

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Financial Accounting For MBAs

Authors: Peter D. Easton, John J. Wild, Robert F. Halsey, Mary Lea McAnally

6th Edition

161853100X, 978-1618531001

More Books

Students also viewed these Accounting questions

Question

Write the numeral as a traditional Chinese numeral. 2001

Answered: 1 week ago

Question

2. Does your tone of voice vary with different students?

Answered: 1 week ago

Question

Explain internal recruitment methods.

Answered: 1 week ago

Question

Summarize job analysis for team members.

Answered: 1 week ago

Question

Describe the recruitment process.

Answered: 1 week ago