Problem 2-5A
The following are financial statements of Bramble Corp..
| Net sales | $2,231,500 | |||
|---|---|---|---|---|
| Cost of goods sold | 1,027,800 | |||
| Selling and administrative expenses | 918,600 | |||
| Interest expense | 90,600 | |||
| Income tax expense | 70,170 | |||
| Net income | $ 124,330 |
| Assets | ||
|---|---|---|
| Current assets | ||
| Cash | $ 73,100 | |
| Debt investments | 85,170 | |
| Accounts receivable (net) | 189,700 | |
| Inventory | 164,200 | |
| Total current assets | 512,170 | |
| Plant assets (net) | 590,700 | |
| Total assets | $ 1,102,870 | |
| Liabilities and Stockholders’ Equity | ||
| Current liabilities | ||
| Accounts payable | $ 173,000 | |
| Income taxes payable | 36,670 | |
| Total current liabilities | 209,670 | |
| Bonds payable | 219,900 | |
| Total liabilities | 429,570 | |
| Stockholders’ equity | ||
| Common stock | 365,400 | |
| Retained earnings | 307,900 | |
| Total stockholders’ equity | 673,300 | |
| Total liabilities and stockholders’ equity | $1,102,870 |
Additional information: The net cash provided by operating activities for 2017 was $203,800. The cash used for capital expenditures was $107,400. The cash used for dividends was $32,170. The weighted-average number of shares outstanding during the year was 50,000.
| (a) | Compute the following values and ratios for 2017. (We provide the results from 2016 for comparative purposes.) (Round Current Ratio and Earnings per share to 2 decimal places, e.g. 15.25 and Debt to assets ratio to 1 decimal place, e.g. 78.9%. Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).) |
|---|
| (i) | Working capital. (2016: $160,500) | |
|---|---|---|
| (ii) | Current ratio. (2016: 1.65:1) | |
| (iii) | Free cash flow. (2016: $48,700) | |
| (iv) | Debt to assets ratio. (2016: 31%) | |
| (v) | Earnings per share. (2016: $3.15) |
| (i) | Working capital | $ | |||
|---|---|---|---|---|---|
| (ii) | Current ratio | :1 | |||
| (iii) | Free cash flow | $ | |||
| (iv) | Debt to assets ratio | % | |||
| (v) | Earnings per share | $ |
Exercise 6-12
The following information is available for Pharoah Company for three recent fiscal years.
| 2017 | 2016 | 2015 | ||||
| Inventory | $552,440 | $569,374 | $337,484 | |||
|---|---|---|---|---|---|---|
| Net sales | 1,955,006 | 1,692,420 | 1,322,224 | |||
| Cost of goods sold | 1,532,544 | 1,277,699 | 936,594 |
Calculate the inventory turnover, days in inventory, and gross profit rate for 2017 and 2016. (Round inventory turnover to 1 decimal place, e.g. 5.2, days in inventory to 0 decimal places, e.g. 125 and gross profit rate to 1 decimal place, e.g. 5.2%.)
| 2017 | 2016 | |||||
| Inventory Turnover | times | times | ||||
|---|---|---|---|---|---|---|
| Days in Inventory | days | days | ||||
| Gross Profit Rate | % | % | ||||
Exercise 8-14 (Part Level Submission)
Suppose the following information was taken from the 2017 financial statements of FedEx Corporation, a major global transportation/delivery company.
| (in millions) | 2017 | 2016 | ||
|---|---|---|---|---|
| Accounts receivable (gross) | $ 3,408 | $ 4,611 | ||
| Accounts receivable (net) | 3,144 | 4,284 | ||
| Allowance for doubtful accounts | 264 | 327 | ||
| Sales revenue | 32,081 | 35,794 | ||
| Total current assets | 6,739 | 6,864 |
Calculate the accounts receivable turnover and the average collection period for 2017 for FedEx Corporation. (Round answers to 1 decimal place, e.g. 12.5. Use 365 days for calculation.)
| Accounts receivable turnover | times | ||
|---|---|---|---|
| The average collection period for 2017 | days |
(b)
| Your answer is correct. | |
Is accounts receivable a material component of the company’s total current assets?
Exercise 9-17
Crane Company reports the following information (in millions) during a recent year: net sales, $10,185.0; net earnings, $250.0; total assets, ending, $5,130.0; and total assets, beginning, $5,150.0.
(a) Calculate the (1) return on assets, (2) asset turnover, and (3) profit margin. (Round answers to 1 decimal place, e.g. 6.2% and 6.2.)
| 1. | Return on assets | % | |||
|---|---|---|---|---|---|
| 2. | Asset turnover | times | |||
| 3. | Profit margin | % |
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