Williams Company is a manufacturer of auto parts having the following financial statements for 2015-2016. Balance Sheet
Question:
Williams Company is a manufacturer of auto parts having the following financial statements for 2015-2016.
Financial statements are the standardized formats to present the financial information related to a business or an organization for its users. Financial statements contain the historical information as well as current period’s financial...
Balance Sheet December 31, 2016 and 2015 2016 2015 $ 260,000 150,000 385,000 $ 795,000 1,640,000 $2 435,000 $ 200,000 900,000 1,335,000 $2 435,000 Cash Accounts receivable Inventory S 135,000 225,000 175,000 S 535,000 1,500,000 S2,035,000 $175,000 800,000 1,060,000 S2,035,000 Total current assets Long-lived assets Total assets Current liabilities Long-term debt Shareholder equity Total debt and equity Income Statement For the years ended December 31, 2016 and 2015 2016 2015 S3,600,000 2,600,000 1,000,000 450,000 550,000 192,500 S 357,500 Sales Cost of sales Gross margin Operating income Net income $3,500,000 2,500,000 1,000,000 500,000 500,000 175,000 $ 325,000 Operating expenses* Taxes Cash Flow from Operations 2016 2015 Net income Plus depreciation expense +Decrease (-inc) in Accounts receivable and Inventory +Increase (-dec) in Current liabilities $325,000 60,000 (135,000) 25,000 S275,000 $357,500 50,000 Cash flow from operations $407,500 Operating expenses include depreciation expense. 2015 $100,000 $50,000 2016 Industry 2016 Capital expenditures Income tax rate Depreciation expense Dividends Year-end stock price Number of outstanding shares Sales multiplier Free cash flow multiplier Earnings multiplier Cost of capital Accounts receivable turnover Inventory turnover Current ratio Quick ratio Cash flow from operations ratio Free cash flow ratio Gross margin percentage Return on assets (net book value) Return on equity $200,000 35% 35% 35.0% $60,000 $50,000 $2.25 1,800,000 $50,000 $2.75 25.00 1,800,000 1.50 18.00 9.00 5.0% 5.0% 11.10 10.50 2.30 1.90 1.20 1.10 30.0% 20.0% 30.0%
Step by Step Answer:
Given data Balance Sheet December 31 2016 and 2015 2016 2015 Cash 260000 135000 Accounts receivable 150000 225000 Inventory 385000 175000 Total current assets 795000 535000 Longlived assets 1640000 15...View the full answer
Cost Management A Strategic Emphasis
ISBN: 978-0078025532
6th edition
Authors: Edward Blocher, David Stout, Paul Juras, Gary Cokins
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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