Use the following industry- average ratios to construct a pro forma balance sheet for Phoebes Cat Foods
Question:
Balance Sheet
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial...
Total asset turnover 1.5 times Average collection periocd (assume 365-day year) Fixed asset turnover Inventory turnover (based 15 days 5 times on cost of goods sold) Current ratio Sales (all on credit) Cost of goods sold Debt ratio 3 times 2 times $3.0 mllon 75% of sales 5096 Current labllities Long-term debt Common stock plus Retained earnings Cash Accounts recelvable Net fixed assets
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Foundations of Finance The Logic and Practice of Financial Management
ISBN: 978-0132994873
8th edition
Authors: Arthur J. Keown, John D. Martin, J. William Petty
Related Video
Inventory turnover is a key metric that helps businesses evaluate the efficiency of their operations. A high turnover ratio is generally considered positive, indicating that the company is effectively selling its inventory and making efficient use of its resources. On the other hand, a low turnover ratio may indicate issues such as overstocking or slow sales and may require further examination to identify and address the underlying causes. Businesses use this ratio to make decisions about inventory levels, production schedules, and pricing strategies. It also helps businesses to identify areas where they may need to make improvements, such as reducing lead times for production or optimizing sales and marketing efforts. Additionally, inventory turnover is used by investors and analysts as a key performance indicator to evaluate the financial health and growth potential of a company.
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