Lowell Inc. gives 30 days credit to customers. On an average, how many extra days are customers
Fantastic news! We've Found the answer you've been seeking!
Question:
Lowell Inc. gives 30 days credit to customers. On an average, how many extra days are customers taking to pay?
Please use the Year 1 information in the sheet attached here.
(Days Sales Outstanding' ratio = AR/Daily sales)
Transcribed Image Text:
INCOME STATEMENT Year 0 Year 1 Revenue 4,700 5,000 Cost of goods sold 2,776 2,943 Gross profit 1,924 2,057 Depreciation 165 197 Other expenses 1,183 1,410 Operating income (EBIT) 576 450 Interest Expense 303 110 Income before taxes 273 340 Provision for income taxes @ 21% 57 71 Net income 216 269 BALANCE SHEEET Year 0 Year 1 ASSETS Cash and marketable securities Short-Term Investments Receivables Inventories LIABILITIES AND EQUITY Notes Payable Accounts payable Accruals 210 191 568 749 563 736 249 278 Total Current Assets 1,590 1,954 Net Fixed Assets 3,100 3,150 Total assets 4,690 5,104 250 363 115 177 451 591 Total current liabilities 816 1,131 Long-term debt 459 414 Total liabilities 1,275 1,545 Common stock and additional paid-in capital 615 709 Retained earnings 2,800 2,850 Total stockholders' equity 3,415 3,559 Total liabilities and stockholders' equity 4,690 5,104 Diluted no. of shares 100.00 100.00 Stock price 76 114 Weighted Avg Cost of Capital (WACC) 7.0% 7.0% Dividend & repurchases per share $ 1.66 $ 2.19 INCOME STATEMENT Year 0 Year 1 Revenue 4,700 5,000 Cost of goods sold 2,776 2,943 Gross profit 1,924 2,057 Depreciation 165 197 Other expenses 1,183 1,410 Operating income (EBIT) 576 450 Interest Expense 303 110 Income before taxes 273 340 Provision for income taxes @ 21% 57 71 Net income 216 269 BALANCE SHEEET Year 0 Year 1 ASSETS Cash and marketable securities Short-Term Investments Receivables Inventories LIABILITIES AND EQUITY Notes Payable Accounts payable Accruals 210 191 568 749 563 736 249 278 Total Current Assets 1,590 1,954 Net Fixed Assets 3,100 3,150 Total assets 4,690 5,104 250 363 115 177 451 591 Total current liabilities 816 1,131 Long-term debt 459 414 Total liabilities 1,275 1,545 Common stock and additional paid-in capital 615 709 Retained earnings 2,800 2,850 Total stockholders' equity 3,415 3,559 Total liabilities and stockholders' equity 4,690 5,104 Diluted no. of shares 100.00 100.00 Stock price 76 114 Weighted Avg Cost of Capital (WACC) 7.0% 7.0% Dividend & repurchases per share $ 1.66 $ 2.19
Expert Answer:
Answer rating: 100% (QA)
Answer To calculate the Days Sales Outstanding DSO ratio we can use the formula DSO Accounts ... View the full answer
Posted Date:
Students also viewed these finance questions
-
finding textbooks Strategic Management An Integrated Approach, Theory and Cases; Charles Hill and Gareth Jones
-
The assets numbering system begins with 1 and the Expenses begin with 4. True False
-
7) The second financial statement to prepare is the statement of retained eamings. To determine the ending balance of retained earnings you need to start with the opening balance as reported in the...
-
Increasingly sophisticated communications technology is allowing more people to work at home. What effect do you think this might have on land-use patterns, specifically the density of residential...
-
Quarterly data for the most recent three years of a products demand is shown below. Use the data to develop a forecast for periods 13 through 16 using classical decomposition of a time series. Period...
-
Let X1,...,Xn be iid n(μ, Ï2), where both parameters are unknown. Simultaneous inference on both μ and Ï can be made using the Bonferroni Inequality in a number...
-
Discuss the main arguments for dispensing with all SSAPs and FRSs.
-
The Brewer Company manufactures and sells pens. Currently, 5,400,000 units are sold per year at $ 0.60 per unit. Fixed costs are $ 860,000 per year. Variable costs are $ 0.40 per unit. Consider each...
-
(1 point) FORMULA FROM CUBIC GRAPH The figure shows the graph of a cubic polynomial. B 1.8 G The function graphed is f(x) = Hint: You may write the function as f(x) = a(x-b)(x- c)(x - d) where b, c,...
-
HEAT TRANSFER EXAMPLE 4.3: MATLAB CODE for 2D Conduction I need help starting in the right direction for my MATLAB project for my heat transfer class that is to create a program to solve 2D steady...
-
The graph shows Mary-Anne's budget line when her income is $4 a day, the price of a bag of peanuts is $2, and the price of a pack of gum is $0.50. If the price of a bag of peanuts falls to $1, what...
-
Explain the following Terms: Linux Macintosh operating system (Mac OS) Microsoft Windows Multitasking Open-source software Operating system (OS) Packaged software Pirated software Platform ...
-
Make a difference Embedded system vs. Operating system Please explain in 100 words and cite sources APA format
-
Explain the following Terms: Application software Booting Computer-aided design Custom software Database Desktop publishing Embedded operating system Financial software Formulas Freeware ...
-
Suppose the cost of a car produced in the United States is $15,000. The current exchange rate is US$1 = 0.60. Instructions: Round your answers to two decimal places. a. What is the cost of the car in...
-
02. The radius of the cam is R, the velocity, and acceleration a, are also given. Find the velocity of rod AB when q-60. (Fig. 2). (20) P Fig.2
-
Separate variables and use partial fractions to solve the initial value problems in Problems 18. Use either the exact solution or a computer-generated slope field to sketch the graphs of several...
-
Financial statements should reflect realistically the performance and position of an organisation, but most of the accountant's rules conflict directly with the concept of realism. Discuss.
-
Explain why financial reports prepared under the historical cost convention are subject to the following major limitations: inventory is undervalued the depreciation charge to the income statement...
-
Explain how each of the limitations in question 11 could be overcome.
Study smarter with the SolutionInn App