Question

At the end of the year, the following information was obtained from the accounting records of
Zachery, Inc.
Sales (all on credit). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $2,750,000
Cost of goods sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,755,000
Average inventory. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . 375,000
Average accounts receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ... . . . . . . . 290,000
Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .... . . . . . . 45,000
Income tax expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . 84,000
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . 159,000
Average investment in assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,800,000
Average stockholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . 895,000
Instructions
a. From the information given, compute the following:
1. Inventory turnover.
2. Accounts receivable turnover.
3. Total operating expenses.
4. Gross profit percentage.
5. Return on average stockholders’ equity.
6. Return on average assets.
b. Zachery has an opportunity to obtain a long-term loan at an annual interest rate of 12 percent and could use this additional capital at the same rate of profitability as indicated by the given data. Would obtaining the loan be desirable from the viewpoint of the stockholders?Explain.


$1.99
Sales0
Views13
Comments0
  • CreatedApril 17, 2014
  • Files Included
Post your question
5000