How to solve these? Question 5

a) Canadian Bacon Inc. financial statements are presented in the table below.

Based on the information in the table, and using a 365-day year, calculate operating cycle.

Round the answers to two decimal places

Balance Sheet December 31, 2012

Cash and marketable securities	$198,000	Accounts payable	$288,000
Accounts receivable	$469,000	Notes payable	$65,000
Inventories	$577,000	Accrued expenses	$84,000
Prepaid expenses	$15,700	Total current liabilities	$437,000
Total current assets	$1,259,700	Long-term debt	$237,000
Gross fixed assets	$1,954,000	Par value and paid-in-capital	$199,000
Less: accumulated depreciation	$476,000	Retained Earnings	$1,864,700
Net fixed assets	$1,478,000	Common Equity	2,063,700
Total assets	$2,737,700	Total liabilities and owners equity	$2,737,700

Income Statement, Year of 2012

Net sales (all credit)	$7,546,600.00
Less: Cost of goods sold	$6,112,746.00
Selling and administrative expenses	$349,000.00
Depreciation expense	$145,000.00
EBIT	$939,854.00
Interest expense	$49,500.00
Earnings before taxes	$890,354.00
Income taxes	$356,141.60
Net income	$534,212.40

Answer:

		(57.14)
Average Day's Purchases

Question 6

a) Canadian Bacon Inc. financial statements are presented in the table below.

Based on the information in the table, and using a 365-day year, calculate Average Days Purchases.

Round the answers to two decimal places

Balance Sheet December 31, 2011

Cash and marketable securities	$143,000	Accounts payable	$278,000
Accounts receivable	$354,000	Notes payable	$87,000
Inventories	$672,000	Accrued expenses	$65,000
Prepaid expenses	$12,500	Total current liabilities	$430,000
Total current assets	$1,181,500	Long-term debt	$284,000
Gross fixed assets	$1,675,000	Par value and paid-in-capital	$228,000
Less: accumulated depreciation	$500,000	Retained Earnings	$1,414,500
Net fixed assets	$1,175,000	Common Equity	1,642,500
Total assets	$2,356,500	Total liabilities and owners equity	$2,356,500

Income Statement Year of 2011

Net sales (all credit)	$3,136,600.00
Less: Cost of goods sold	$2,195,620.00
Selling and administrative expenses	$345,000.00
Depreciation expense	$146,000.00
EBIT	$449,980.00
Interest expense	$45,300.00
Earnings before taxes	$404,680.00
Income taxes	$161,872.00
Net income	$242,808.00

Answer:

		(5,615.40)
Days payables outstanding

Question 7

a) Canadian Bacon Inc. financial statements are presented in the table below.

Based on the information in the table, and using a 365-day year, calculate Days payables outstanding.

Round the answers to two decimal places

Balance Sheet December 31, 2014

Cash and marketable securities	$132,000	Accounts payable	$399,000
Accounts receivable	$311,000	Notes payable	$98,500
Inventories	$512,000	Accrued expenses	$89,300
Prepaid expenses	$11,300	Total current liabilities	$586,800
Total current assets	$966,300	Long-term debt	$799,400
Gross fixed assets	$2,104,000	Par value and paid-in-capital	$298,000
Less: accumulated depreciation	$398,000	Retained Earnings	$988,100
Net fixed assets	$1,706,000	Common Equity	1,286,100
Total assets	$2,672,300	Total liabilities and owners equity	$2,672,300

Income Statement, Year of 2014

Net sales (all credit)	$4,276,600.00
Less: Cost of goods sold	$3,292,982.00
Selling and administrative expenses	$349,000.00
Depreciation expense	$148,000.00
EBIT	$486,618.00
Interest expense	$49,600.00
Earnings before taxes	$437,018.00
Income taxes	$174,807.20
Net income	$262,210.80

Answer:

		(46.31)
Cash Conversion Cycle

Question 8

American Bacon Inc. financial statements are presented in the table below.

Based on the information in the table, and using a 365-day year, calculate cash conversion cycle

Round the answers to two decimal places

Balance Sheet December 31, 2010

Cash and marketable securities	$102,000	Accounts payable	$287,000
Accounts receivable	$299,000	Notes payable	$61,200
Inventories	$628,000	Accrued expenses	$51,900
Prepaid expenses	$10,300	Total current liabilities	$400,100
Total current assets	$1,039,300	Long-term debt	$415,000
Gross fixed assets	$1,502,000	Par value and paid-in-capital	$376,000
Less: accumulated depreciation	$312,000	Retained Earnings	$1,038,200
Net fixed assets	$1,190,000	Common Equity	1,414,200
Total assets	$2,229,300	Total liabilities and owners equity	$2,229,300

Income statement, Year of 2010

Net sales (all credit)	$6,387,700.00
Less: Cost of goods sold	$4,726,898.00
Selling and administrative expenses	$345,000.00
Depreciation expense	$148,000.00
EBIT	$1,167,802.00
Interest expense	$50,600.00
Earnings before taxes	$1,117,202.00
Income taxes	$446,880.80
Net income	$670,321.20

Answer:

(42.70)