WHAT DOES THE 5.5 TIMES REFER TO IN THE QUESTION BELOW AND HOW ARE THE RESTATED nUMBERS
Question:
WHAT DOES THE 5.5 TIMES REFER TO IN THE QUESTION BELOW AND HOW ARE THE RESTATED nUMBERS FOR lONG TERM lIABILITES AND iNVENTORY CALCULATED?
With the following accounts included in Brown Inc.’s financial statements and assumptions, restate the company’s statement of income and statement of financial position. Statement of income: revenue of $3,000,000 will increase by 7%; cost of sales, as a percentage of revenue will decrease from 50% to 45%; distribution costs of $600,000 will increase by 10%, and administrative expenses of $500,000 will be 15% of revenue; the $100,000 of other expenses will increase by 10%; and income tax expense will go from 40% to 42%.
Statement of financial position: non-current assets of $2,000,000 will grow by 10%; inventories currently at 5 times will improve to 5.5 times; both trade receivables at $200,000 and other current assets at $100,000 will grow by 10%; equity remains unchanged at $1,100,000; current liabilities will grow from $500,000 to $600,000 and long-term liabilities is $1,000,000.
Computer Networking A Top-Down Approach
ISBN: 978-0136079675
5th edition
Authors: James F. Kurose, Keith W. Ross