DeVita Company, which has been operating for three years, provides marketing consulting services worldwide for dot.com companies. You are a financial analyst assigned to report on the DeVita management team's effectiveness at managing its assets efficiently. At the start of 2003 (its fourth year), DeVita's T-account balances were as follows. Dollars are in thousands.

Required: 1. Usins the data from these T-accounts. amounts for the following on January 1. 2003. were Assets S_ = Liabilities S_ Stockholders' Equity S_

^«»h f 2. Enter the following 2003 transactions in the T-accounts:

a. Received $7,000 cash from clients on account.

b. Provided $70,000 in services to clients who paid $60,000 in cash and owed the rest on account

c. Received $500 in cash as income on investments.

d. Paid $20,000 in wages. $20,000 in travel. $12,000 rent, and S2.000 on accounts payable.

e. Received a utility bill for $1,000.

/. Paid $600 in dividends to stockholders.

g. Received $2,000 in cash from clients in advance of services DeVita will provide next year. 3. Compute ending balances in the T-accounts to determine amounts for the following on December 3 1 . 2003:

Revenues S - Expenses S = Net Income S Assets $ = Liabilities S + Stockholders' Equity $ 4. Calculate the total asset turnover ratio for 2003. If the company had an asset turnover ratio in 2002 of 2.00 and in 2001 of 1.80. what does your computation suggest to you about DeVita Company?

What would you say in your report?

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Assets Cash Accounts Receivable Long-Term Investments 4,000 10,000 8,000 Liabilities Accounts Payable Unearned Revenue Long-Term Notes Payable 3,000 7,000 2,000