Name: Date: When the calculations for Net sales, Cost of goods sold, and Net income are correct, the cells will change to yellow. Following is an incomplete current-year income statement. Determine Net Sales, Cost of goods sold and Net Income. Additional information follows: 1. Return on total assets is 16% (average total assets is $68,750). 2. Inventory tumover is 5 (average inventory is $6,000). 3. Accounts receivable turnover is 8 (average accounts receivable is $6,250). Income Statement Net sales Cost of goods sold Selling, general, and administrative expenses Income tax expense Net income Name. Date: When the calculations for the ratios below are correct. the cells will change to vellow. Summary information from the financial statements of two companies competing in the same industry follows. Fitz Company Mill Company Fitz Company MO Company Data from the current year-end balance sheets Assets Cash Accounts receivable, net Current notes receivable (trade) Merchandise inventory Prepaid expenses Plant assets, net Total assets $19,500 37,400 9,100 84,440 5,000 290,000 $445,440 $34.000 57,400 7.200 132,500 6.950 304,400 $542,450 Data from the current year's Income statement Sales Cost of goods sold Interest expense Income tax expense Net Income Basic eamings per share Cash dividends per share $770,000 585,100 7.900 14.800 162,200 4.51 3.81 $880,200 632,500 13,000 24,300 210,400 5.11 3.93 Llabilities and Equity Current liabilities Long-term notes payable Common stock, $5 par value Retained eamings Total liabilities and equity $61,340 80,800 180,000 123,300 $93,300 101,000 206,000 142,150 $542.450 Beginning-of-year balance sheet data Accounts receivable, net Current notes receivable (trade) Merchandise inventory Total assets Common stock, $5 par value Retained eamings $29,800 0 55,600 398,000 180.000 98,300 $54,200 0 107,400 382,500 206,000 93,600 $445,440 Required: 1a. For both companies compute the (a) current ratio, (b) acid-test ratio, (c) accounts (including notes) receivable tumover, (d) inventory tumover, (e) days' sales in inventory, and (f) days' sales uncollected. (Do not round intermediate calculations.) 1b. Identify the company you consider to be the better short-term credit risk. (a) Current ratio: Fitz Mill to 1 to 1 (d) Inventory tumover. Fitz MINI times times (e) ' (b) Acid-test ratio: Fitz Mill to 1 to 1 (e) Days' sales in inventory: Fitz days MILI days (c) Accounts receivable tumover Fitz times Mill times Days' sales uncollected: Fitz days Mill days Short-term credit risk analysis: (2-3 brief sentences)
