Lizzies Clothing Barn, Inc.

Statement of Financial Position

December 31, 20X4

Current assets Current liabilities

Cash.. $1,000,000 Accounts payable. $5,500,000

Accounts receivable (net). 3,200,000 Salaries payable.. 800,000

Marketable securities 600,000 Dividends payable.. 300,000

Inventory... 3,500,000 Interest payable... 250,000

Prepaid rent... 600,000 Income tax payable..... 220,000

Prepaid insurance.. 100,000 Total current liabilities. 7,070,000

Total current assets 9,000,000 Long term debt

Property & equipment Note payable. 2,300,000

Building (net) 3,900,000 Mortgage payable. 1,400,000

Equipment (net) 6,200,000 Total long-term debt... 3,700,000

Total property & equipment... \10,100,000 Total liabilities... $10,770,000

Other assets Stockholders equity

Investments... 1,500,000 Common stock 6,000,000

Goodwill. 700,000 Retained earnings.. 4,530,000

Total other assets. 2,200,000 Total stockholders equity.. 10,530,000

Total assets. $21,300,000 Total liabilities & stockholders equity $21,300,000

Lizzies Clothing Barn, Inc.

Income Statement

For the Year Ended December 31, 20X4

Sales.. $27,000,000

Cost of goods sold... 12,000,000

Gross profit 15,000,000

Operating expenses:

General and administrative expenses $4,100,000

Selling expenses 6,200,000

Total operating expenses 10,300,000

Operating income. 4,700,000

Nonoperating items:

Interest revenue.. (40,000)

Interest expense. 222,000

Nonoperating expense (net) 182,000

Income before taxes. 4,518,000

Income tax expense.. 1,807,000

Net income.. $2,711,000

(See additional financial information on next page.)

Additional financial information:

600,000 weighted average number of common shares were issued and outstanding throughout 20X4.

The accounts receivable balance (net of uncollectible accounts) on December 31, 20X3 was $2,500,000. All sale are credit sales.

The inventory balance on December 31, 20X3 was $4,000,000.

$1,500,000 in total dividends were declared in 20X4.

Total stockholders equity on December 31, 20X3 was $9,516,000.

Total assets on December 31, 20X3 were $19,625,000.

The market price per share of common stock on December 31, 20X4 was $47.

There was no preferred stock.

4. The price/earnings ratio for 20X4 was:? Dividend yield for 20X4 was:? Dividend payout for 20X4 was:?

Lizzies Clothing Barn, Inc. (LCB) has total debt of $460,000 and equity of $800,000. LCB is seeking capital to fund an expansion. LCB is planning to issue an additional $400,000 in common stock and is negotiating with a bank to borrow additional funds. The bank requires a debt-to-equity ratio of .60. What is the maximum additional amount LCB will be able to borrow?

The following information is available on selected account balances of Lizzies Clothing Barn, Inc.:

January 1, 20X5 Inventory $50,000

20X5 Purchases. $600,000

20X5 Cost of goods sold $590,000

20X5 Sales. $1,200,000

What was inventory turnover for 20X5?

The following selected account balances and other operational information is available for Lizzies Clothing Barn, Inc.:

December 31, 20X4 Accounts receivable (net)....... $250,000

December 31, 20X5 Accounts receivable (net)....... $300,000

Cash sales. $600,000

Accounts receivable turnover 5

Inventory turnover. 8

Lizzies Clothing Barn, Inc.s total sales for 20X5 were: