Suppose that Royval Inc has the following data: Total assets turnover Days sales outstanding Inventory turnover ratio Fixed assets turnover Current ratio Gross profit margin on sales: Cash Also suppose that Royval Inc has the following balance sheet: Accounts receivable Inventories Fixed assets Total assets Assets Sales 1.5 36.5 days $500,000 4 2 20.00% Balance Sheet Liabilities Current Liabilities Long-term debt Common stock Retained earnings Total Liabilities and equity Cost of goods sold According to the video, total assets tumover is equal to of total assets given, this means that Royval's sales must be Sales $135,000 $120,000 Given the value of total assets turnover, along with the level Recenobles Annual salen S According to the video, DSO (days sales outstanding) can be written as with the level of sales you already calculated, this means that Royval's recevables must be Given the value of DSO, along According to the video, the inventory ratio can be written as equal to the level of sales you already calculated, this means that Royval's inventories must be According to the video, the fixed asset turnover ratio can be written as This yields a value of cash of According to the video, cash can be written as total assets minus fixed assets, inventories, and accounts receivable. for Royval. According to the video, the current ratio can be written as and the value of the current ratio yields a value of current liabilities of approximately Fixed assets According to the video, the value of total assets is equal to the value of total liabilities and equity. According to the video, gross profit margin can be written as of sales you have already calculated, this means that Royval has a cost of goods sold of Step 3: Practice: Balance Sheet Analysis Now it's time for you to practice what you've learned. Suppose that Royval Inc has the following data: Total assets turnover Days sales outstanding Inventory turnover ratio Fixed assets turnover Current ratio. Gross profit margin on sales: 1.5 Given the value of the inventory ratio, along with In the video, total liabilities and equity is equal to . Given the level of total liabilities and equity, as well as retained earnings, current liabilities and the level of long-term debt, solving for Royval's common stock yields 36.5 days 4 4 2 20.00% This means that Royval has fixed assets of Plugging in the value for current assets Given the gross profit margin and the level Also suppose that Royval Inc has the following balance sheet: Cash Accounts receivable Inventories Fixed assets Total assets Sales Assets Balance Sheet $475,000 be equal to Liabilities. Current Liabilities Long-term debt Common stock Retained earnings Total Liabilities and equity Cost of goods sold $128,250 Use the formulas you learned about in the previous stage of the problem to answer the following questions. $114,000 Given the value of total assets turnover, along with the level of total assets given, this means that Royval's sales must be Given the value of DSO, along with the level of sales you already calculated, this means that Royval's receivables must be Solving for cash yields a value of cash of inventories, the level of current liabilities must be Given the value of the inventory ratio, along with the level of sales you already calculated, this means that Royval's inventories must be Given the value of the fixed assets turnover ratio, as well as the level of sales, this means that Royval's fixed assets must for Royval. Given the current ratio of 2 and values of cash, accounts receivable, and Given the level of retained earnings, current liabilities, and long-term debt, along with the relationship between total assets and total liabilities and equity, this means that Royval's common stock must be Given the gross profit margin and the level of sales you have already calculated, this means that Royval has a cost of goods sold of
