Presented below is an incomplete income statement and an incomplete comparative balance sheet of Bondi Corporation. Additional
Question:
Presented below is an incomplete income statement and an incomplete comparative balance sheet of Bondi Corporation.
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Additional information:
1. The receivables turnover for 2014 is 10 times.
2. All sales are on account.
3. The profit margin for 2014 is 14.5%.
4. Return on assets is 20% for 2014.
5. The current ratio on December 31, 2014, is 3.0.
6. The inventory turnover for 2014 is 4.2 times.
Instructions
Compute the missing information given the ratios above. Show computations. (Note: Start with one ratio and derive as much information as possible from it before trying another ratio. List all missing amounts under the ratio used to find the information.)
Bondi Corporation Income Statement For the Year Ended December 31, 2014 Net sales Cost of goods sold Gross proft Operating expenses Income from operations Othe 10,500,000 1,500,000 r expenses and losses Interest expense Income before income taxes Income tax expense Net income 550,000 Bondi Corporation Balance Sheets December 31 Assets 2014 2013 Current assets Cash Accounts receivable (net) Inventory 480,000 375,000 950,000 1,720,000 3,045,000 4,455,000 $7,500,000 Total current assets Plant assets (net) Total assets 4,620,000 Assets Liabilities and Stockholders' Equity Current liabilities Long-term notes payable 2014 2013 825,000 3,300,000 4,125,000 3,000,000 375,000 3,375,000 $7,500,000 Total liabilities Common stock, $1 par Retained earnings 3,000,000 400,000 3,400,000 Total stockholders' equity Total labilities and stockholders' equity2
Step by Step Answer:
Receivables turnover 10 Average receivables 1050000 1050000 Net receivables 123114 950000 2100000 Ne...View the full answer
Managerial Accounting Tools for business decision making
ISBN: 978-1118096895
6th Edition
Authors: Jerry J. Weygandt, Paul D. Kimmel, Donald E. Kieso
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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