Ivanhoe Automotive’s balance sheet at the end of its most recent fiscal year shows the following information: Ivanhoe Automotive Balance Sheet as of March 31, 2017 Assets: Liabilities and Equity: Cash and marketable sec. $40,000 Accounts payable and accruals $168,000 Accounts receivable 158,000 Notes payable 27,000 Inventory 232,000 Total current assets $430,000 Total current liabilities $195,000 Long-term debt 172,000 Total liabilities $367,000 Net plant and equipment 780,000 Common stock 317,000 Goodwill and other assets 92,000 Retained earnings 618,000 Total assets $1,302,000 Total liabilities and equity $1,302,000 In addition, it was reported that the firm had a net income of $159,000 on net sales of $4,200,000. Excel Template (Note: This template includes the problem statement as it appears in your textbook. The problem assigned to you here may have different values. When using this template, copy the problem statement from this screen for easy reference to the values you’ve been given here, and be sure to update any values that may have been pre-entered in the template based on the textbook version of the problem.) (a) Your answer has been saved. See score details after the due date. What are the firm’s current ratio and quick ratio? (Round answers to 2 decimal places, e.g.15.25.) Current Ratio 2.21 times Quick Ratio 1.02 times Calculate the firm’s days’ sales outstanding, total asset turnover ratio, and fixed asset turnover ratio. (Round answers to 2 decimal places, e.g.15.25. Use 365 days for calculation.) Days Sales Outstanding days Total Asset Turnover times Fixed Asset Turnover times
Reporting Cash Flows
Reporting of cash flows means a statement of cash flow which is a financial statement. A cash flow statement is prepared by gathering all the data regarding inflows and outflows of a company. The cash flow statement includes cash inflows and outflows from various activities such as operating, financing, and investment. Reporting this statement is important because it is the main financial statement of the company.
Balance Sheet
A balance sheet is an integral part of the set of financial statements of an organization that reports the assets, liabilities, equity (shareholding) capital, other short and long-term debts, along with other related items. A balance sheet is one of the most critical measures of the financial performance and position of the company, and as the name suggests, the statement must balance the assets against the liabilities and equity. The assets are what the company owns, and the liabilities represent what the company owes. Equity represents the amount invested in the business, either by the promoters of the company or by external shareholders. The total assets must match total liabilities plus equity.
Financial Statements
Financial statements are written records of an organization which provide a true and real picture of business activities. It shows the financial position and the operating performance of the company. It is prepared at the end of every financial cycle. It includes three main components that are balance sheet, income statement and cash flow statement.
Owner's Capital
Before we begin to understand what Owner’s capital is and what Equity financing is to an organization, it is important to understand some basic accounting terminologies. A double-entry bookkeeping system Normal account balances are those which are expected to have either a debit balance or a credit balance, depending on the nature of the account. An asset account will have a debit balance as normal balance because an asset is a debit account. Similarly, a liability account will have the normal balance as a credit balance because it is amount owed, representing a credit account. Equity is also said to have a credit balance as its normal balance. However, sometimes the normal balances may be reversed, often due to incorrect journal or posting entries or other accounting/ clerical errors.
| Ivanhoe Automotive Balance Sheet as of March 31, 2017 |
||||||
| Assets: | Liabilities and Equity: | |||||
| Cash and marketable sec. | $40,000 | Accounts payable and accruals | $168,000 | |||
| Accounts receivable | 158,000 | Notes payable | 27,000 | |||
| Inventory | 232,000 | |||||
| Total current assets | $430,000 | Total current liabilities | $195,000 | |||
| Long-term debt | 172,000 | |||||
| Total liabilities | $367,000 | |||||
| Net plant and equipment | 780,000 | Common stock | 317,000 | |||
| 92,000 | 618,000 | |||||
| Total assets | $1,302,000 | Total liabilities and equity | $1,302,000 |
In addition, it was reported that the firm had a net income of $159,000 on net sales of $4,200,000.
Excel Template
(Note: This template includes the problem statement as it appears in your textbook. The problem assigned to you here may have different values. When using this template, copy the problem statement from this screen for easy reference to the values you’ve been given here, and be sure to update any values that may have been pre-entered in the template based on the textbook version of the problem.)
(a)
| Current Ratio | 2.21 | times | |
| Quick Ratio | 1.02 | times |
| Days Sales Outstanding | days | ||
| Total Asset Turnover | times | ||
| Fixed Asset Turnover | times |
Trending now
This is a popular solution!
Step by step
Solved in 3 steps
