Problem- 3

Selected information from the comparative financial statements of Fava Company for the year ended December 31, appears below:

2017 2016

Accounts receivable (net) $ 180,000 $200,000

Inventory 140,000 160,000

Total assets 1,200,000 800,000

Current liabilities 140,000 110,000

Long-term debt 400,000 300,000

Net credit sales 1,330,000 700,000

Cost of goods sold 900,000 530,000

Interest expense 50,000 25,000

Income tax expense 60,000 29,000

Net income 150,000 85,000

Instructions

Answer the following questions relating to the year ended December 31, 2017. Show computations.

1. Inventory turnover for 2017 is __________.

2. Times interest earned in 2017 is __________.

3. The debt to assets ratio for 2017 is __________.

4. Accounts receivable turnover for 2017 is __________.

5. Return on assets for 2017 is __________.