Intermediate Accounting
9th Edition
ISBN: 9781259722660
Author: J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher: McGraw-Hill Education
expand_more
expand_more
format_list_bulleted
Videos
Textbook Question
Chapter 4, Problem 4.26E
Evaluating efficiency of asset management
• LO4–10
The 2018 income statement of Anderson Medical Supply Company reported net sales of $8 million, cost of goods sold of $4.8 million, and net income of $800,000. The following table shows the company’s comparative balance sheets for 2018 and 2017:
| ($ in thousands) | ||
| 2018 | 2017 | |
| Assets | ||
| Cash | $300 | $380 |
| Accounts receivable | 700 | 500 |
| Inventory | 900 | 700 |
| Property, plant, and equipment (net) | 2,400 | 2,120 |
| Total assets | $4,300 | $3,700 |
| Liabilities and Shareholders’ Equity | ||
| Current liabilities | $960 | $830 |
| Bonds payable | 1,200 | 1,200 |
| Paid-in capital | 1,000 | 1,000 |
| 1,140 | 670 | |
| Total liabilities and shareholders’ equity | $4,300 | $3,700 |
Some industry averages for Anderson’s line of business are
| Inventory turnover | 5 times |
| Average collection period | 25 days |
| Asset turnover | 1.8 times |
Required:
1. Determine the following ratios for 2018:
a. Inventory turnover
b. Receivables turnover
c. Average collection period
d. Asset turnover
2. Assess Anderson’s asset management relative to its industry.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Problem 5
Jill Corporation's sales, current assets, and current liabilities have been reported
as follows over the last five years (amounts in thousands):
2019
2018
2017
2016
2015
P10,800
2,626
Sales
P8,000
P9,200
2,220
P9,600
P8,640
Current assets
2,181
2,267
2,225
Current liabilities
475
450
350
325
250
Required: Express all the sales, current assets, and current liabilities on trend index.
Round your decimals up to 2 places.
a. Use 2015 as your base year.
b. Use 2019 as your base year.
Question 10 of 25
Based on the following data, what is the amount of working capital?
Accounts payable
Accounts receivable
Cash
Intangible assets
Inventory
Long-term investments
Long-term liabilities
Short-term investments
Notes payable (short-term)
Property, plant, and equipment
Prepaid insurance
$404240
O $411680
>
O $458800
$79360
141360
86800
124000
171120
198400
248000
99200
69440
1661600
2480
jDL Coroproation Selected Financial Data as at december 21,2016
Current asset 2,50,000$
Current Liabilities 1,50,000$
Inventories 60,000$
Accounts Receivable 45,000$
Revenue 9,50,000$
Cost of Good Sold 6,75,000$
Note: Ignore averaging for this question
JDL's Quick ratio is:
1
0.8
2.45
1.27
JDL's average collection period is:
8 days
11 days
17 days
20 days
JDL's inventory turnover is:
9.50 times
11.25 times
4.50 times
5.43 times
JDL's receivables turnover is:
24.34 times
22.56 times
21.11 times
20.11 times
Chapter 4 Solutions
Intermediate Accounting
Ch. 4 - The income statement is a change statement....Ch. 4 - What transactions are included in income from...Ch. 4 - Prob. 4.3QCh. 4 - Prob. 4.4QCh. 4 - Prob. 4.5QCh. 4 - What are restructuring costs and where are they...Ch. 4 - Define intraperiod tax allocation. Why is the...Ch. 4 - How are discontinued operations reported in the...Ch. 4 - What is meant by a change in accounting principle?...Ch. 4 - Prob. 4.10Q
Ch. 4 - The correction of a material error discovered in a...Ch. 4 - Define earnings per share (EPS). For which income...Ch. 4 - Prob. 4.13QCh. 4 - Describe the purpose of the statement of cash...Ch. 4 - Prob. 4.15QCh. 4 - Explain what is meant by noncash investing and...Ch. 4 - Distinguish between the direct method and the...Ch. 4 - Prob. 4.18QCh. 4 - Prob. 4.19QCh. 4 - Show the calculation of the following...Ch. 4 - Show the DuPont frameworks calculation of the...Ch. 4 - Prob. 4.22QCh. 4 - Prob. 4.23QCh. 4 - Prob. 4.1BECh. 4 - Multiple -step income statement LO41, LO43 Refer...Ch. 4 - Prob. 4.3BECh. 4 - Multiple -step income statement LO41, LO43 The...Ch. 4 - Prob. 4.5BECh. 4 - Prob. 4.6BECh. 4 - Prob. 4.7BECh. 4 - Discontinued operations LO44 Refer to the...Ch. 4 - Discontinued operations LO44 Refer to the...Ch. 4 - Prob. 4.10BECh. 4 - Prob. 4.11BECh. 4 - Prob. 4.12BECh. 4 - Statement of cash flows; indirect method LO48 Net...Ch. 4 - Prob. 4.14BECh. 4 - Prob. 4.15BECh. 4 - Profitability ratios LO410 The 2018 income...Ch. 4 - Prob. 4.17BECh. 4 - Inventory turnover ratio LO410 During 2018, Rogue...Ch. 4 - Operating versus Nonoperating Income LO41 Pandora...Ch. 4 - Income statement format; single step and multiple...Ch. 4 - Income statement format; single step and multiple...Ch. 4 - Multiple-step continuous statement of...Ch. 4 - Income statement presentation LO41, LO45 The...Ch. 4 - Prob. 4.6ECh. 4 - Income statement presentation; discontinued...Ch. 4 - Discontinued operations; disposal in subsequent...Ch. 4 - Discontinued operations; disposal in subsequent...Ch. 4 - Earnings per share LO45 The Esposito Import...Ch. 4 - Comprehensive income LO46 The Massoud Consulting...Ch. 4 - Prob. 4.12ECh. 4 - Prob. 4.13ECh. 4 - IFRS; statement of cash flows LO48, LO49 Refer to...Ch. 4 - Prob. 4.15ECh. 4 - Prob. 4.16ECh. 4 - Statement of cash flows; indirect method LO48...Ch. 4 - Prob. 4.18ECh. 4 - Prob. 4.19ECh. 4 - Statement of cash flows; indirect method LO48...Ch. 4 - Statement of cash flows; direct method LO48 Refer...Ch. 4 - Prob. 4.22ECh. 4 - Prob. 4.23ECh. 4 - Concepts; terminology LO41, LO42, LO43, LO44,...Ch. 4 - Inventory turnover; calculation and evaluation ...Ch. 4 - Evaluating efficiency of asset management LO410...Ch. 4 - Profitability ratios LO410 The following...Ch. 4 - Prob. 4.28ECh. 4 - Prob. 4.29ECh. 4 - Prob. 4.30ECh. 4 - Prob. 4.31ECh. 4 - Prob. 4.32ECh. 4 - Comparative income statements; multiple-step...Ch. 4 - Discontinued operations LO44 The following...Ch. 4 - Income statement presentation; Discontinued...Ch. 4 - Restructuring costs; Discontinued operations;...Ch. 4 - Income statement presentation; Restructuring...Ch. 4 - Income statement presentation; Discontinued...Ch. 4 - Income statement presentation; statement of...Ch. 4 - Multiple-step statement of income and...Ch. 4 - Statement of cash flows LO48 The Diversified...Ch. 4 - Integration of financial statements; Chapters 3...Ch. 4 - Statement of cash flows; indirect method LO48...Ch. 4 - Calculating activity and profitability ratios ...Ch. 4 - Use of ratios to compare two companies in the same...Ch. 4 - Creating a balance sheet from ratios; Chapters 3...Ch. 4 - Prob. 4.15PCh. 4 - Interim financial reporting Appendix 4 Branson...Ch. 4 - Prob. 4.1BYPCh. 4 - Judgment Case 42 Restructuring costs LO43 The...Ch. 4 - Prob. 4.3BYPCh. 4 - Prob. 4.4BYPCh. 4 - Prob. 4.5BYPCh. 4 - Prob. 4.6BYPCh. 4 - Prob. 4.7BYPCh. 4 - IFRS Case 48 Statement of cash flows;...Ch. 4 - Judgment Case 49 Income statement presentation;...Ch. 4 - Prob. 4.10BYPCh. 4 - Integrating Case 412 Balance sheet and income...Ch. 4 - Prob. 4.13BYPCh. 4 - Prob. 4.17BYPCh. 4 - Prob. 4.18BYPCh. 4 - Continuing Cases Target Case LO43, LO44, LO46,...
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- 18 eppertree Company’s financial statements on December 31, 2021, showed the following: Net Sales $ 550,000 Fixed Assets, January 1 $ 146,000 Fixed Assets, December 31 $ 134,000 Total Assets, January 1 $ 194,000 Total Assets, December 31 $ 200,000 What is the fixed asset turnover for 2021? Multiple Choice 3.93 2.60 4.10 2.79arrow_forwardBE10–15 The Gap's most recent financial statements report beginning total assets of US$3,963.9 million; ending total assets of US$5,188.8 million; net sales of US$11,635.4 million; and net income of US$1,127.1 million. Calculate The Gap's asset turnover and return on assets ratios.arrow_forwardQuestion 4 XYZ Company Ltd. producing widgets sold $760 million of them at a cost of $580 million in the financial year ending 31 March 2022. Highlights of XYZ company's balance sheet on that date are given below: XYZ Company Ltd Balance Sheet as of 31 March 2022 $m 150 190 75 Assets Cash Accounts receivable Inventory Total current assets Plant, property, and equipment 415 5300 Liabilities and Equity Accounts payable Notes payable Accruals Total current liabilities Long term debt Sm 60 350 75 485 2985 3470 2245 5715 Total liabilities Common equity Total liabilities and Equity Total Assets 5715 a) Calculate the cash conversion cycle for XYZ Company Ltd. b) Which is preferable, a longer or a shorter cash conversion cycle? Why?arrow_forward
- 2022 Income Statement: Sales revenue Cost of goods sold Fixed Costs 600,000 240,000 50,000 Selling, General, and Admin Expenses 30,000 Depreciation 50,000 2021 Balance Sheet: Assets Cash Accounts Receivable Inventories Fixed Assets Accumulated Depreciation Intangible Assets 2022 Balance Sheet: Assets Cash Accounts Receivable Inventories Fixed Assets Accumulated Depreciation, Intangible Assets 60,000 40,000 20,000 300,000 100,000 50,000 80,000 50,000 40,000 400,000 150,000 80,000 Liabilities Notes Payable Accounts Payable Long-Term Debt Owner's Equity Retained Earnings Common Stock Liabilities Notes Payable Accounts Payable Long-Term Debt Owner's Equity Retained Earnings Common Stock 30,000 40,000 150,000 60,000 120,000 50,000 40,000 180,000 ????? 150,000 What is net income for 2022? Total interest paid in 2022 is $70,000 and the tax rate is 25%.arrow_forwardQuestion One The Purple Lilac has provided the following financial statement as at December 31, 2017 BALANCE SHEET 2016 2017 Non-Current Assets Cost Depn NBV Cost Depn NBV Goodwill 280,000 220,000 Tangible Assets 1,700,000 (330,000) 1,370,000 2,000,000 (410,000) 1,590,000 Long term Investment 230,000 110,000 1,880,000 1,920,000 Current Assets Closing Stock 50,000 35,000 Debtors 35,000 45,000 Short term Investment 40,000 85,000 Bank 0 40,000 Cash 3,500 128,500 11,000 216,000 Total Assets 2,008,500 2,136,000 Capital &…arrow_forwardProblem #1 The following balance sheet and income statement data is given: 31-Dec Yr 2021 Yr 2020 Cash $4,300 $3,700 Accounts receivable (net) 22,000 23,400 Inventories 10,000 7,000 Plant assets (net) 75,000 86,000 Total assets 111,300 120,100 Accounts payable 12,370 11,100 Bonds payable 70,000 70,000 Total liabilities 82,370 81,100 Common stock, $10 par 65,000 59,000 Paid-in capital 10,000 10,000 Retained earnings 24,300 20,600 Total stockholders’ equity 99,300 89,600 Net credit sales 100,000 Cost of goods sold 60,350 Gross profit 39,650 Net income 14,000 REQUIRED: Compute the following ratios for 2021. NOTE: Copy and paste the information below into the answer box first and then show your calculation steps for this problem to receive credits. (1) Accounts receivable turnover=____________________ (2) Inventory turnover=__________________ (3) Accounts payable…arrow_forward
- QUESTION 6 E18.7 E18.7 (LO 3) Nordstrom, Inc. operates department stores in numerous states. Suppose selected financial statement data (in millions) for 2020 are presented below. Compute liquidity ratios. End of Year Beginning of Year Cash and cash equivalents $ 795 $ 72 Accounts receivable (net) 2,035 1,942 Inventory 898 900 Other current assets 326 303 Total current assets $4,054 $3,217 Total current liabilities $2,014 $1,601 For the year, net credit sales were $8,258 million, cost of goods sold was $5,328 million, and net cash provided by operating activities was $1,251 million. Instructions Compute the current ratio, accounts receivable turnover, average collection period, inventory turnover, and days in inventory at the end of the current year.arrow_forwardPLASMA SCREENS CORPORATION Balance Sheets December 31, 2021 and 2020 2021 2020 Assets Current assets: Cash $ 155,100 74,800 87,000 2,400 171,800 88,000 72,800 1,200 Accounts receivable Inventory Prepaid rent Long-term assets: Land 440,000 732,00ө (406, ө00) $1,085,300 440, ө0ө 630,000 252,000) $1,151,800 Equipment Accumulated depreciation Total assets Liabilities and Stockholders' Equity Current liabilities: Accounts payable Interest payable Income tax payable Long-term liabilities: Notes payable Stockholders' equity: 91,000 6,900 6,400 $ 77,800 13,800 4, 200 115,000 230,000 Common stock 660,000 206,000 $1,085,300 660,000 166,000 $1,151,800 Retained earnings Total liabilities and stockholders' equity Additional Information for 2021: 1. Net income is $61,000. 2. The company purchases $102,000 in equipment. 3. Depreciation expense is $154,000. 4. The company repays $115,000 in notes payable. 5. The company declares and pays a cash dividend of $21,000. %24 %24 %24arrow_forward2022 Sales revenue Cost of goods sold Gross profit $500,000 400,000 ? Operating expenses Wages expense 37,000 Rent expense 9,200 Utilities expense ? Depreciation expense Total operating expenses Profit from operations 6,000 59,400arrow_forward
- Problem 19: Laiho Industries’s 2017 and 2018 balance sheets (in thousands of dollars are shown). Please show all work, INCLUDING FORMULAS AND HOW YOU GOT EACH PIECE OF THE FORMULA. A, B, C ARE COMPLETE. PLEASE ANSWER D, E, F. a. Sales for 2018 were $455,150,000, and EBITDA was 15% of sales. Furthermore, depreciation and amortization were 11% of net fixed assets, interest was $8,575,000, the corporate tax rate was 40%, and Laiho pays 40% of its net income as dividends. Given this information, construct the firm’s 2018 income statement. b. Construct the statement of stockholders’ equity for the year ending December 31, 2018, and the 2018 statement of cash flows. c. Calculate 2017 and 2018 net operating working capital (NWOC) and 2018 free cash flow (FCF). Assume the firm has no excess cash. d. If Laiho increased its dividend payout ratio, what effect would this have on corporate taxes paid? What effect would this have on taxes paid by the company’s shareholders? (Answer part D in full,…arrow_forwardReact Corporation Comparative Statements of Financial Position December 31, 2025 and 2024 2025 2024 Assets Current Assets Cash & Cash Equivalent 106,789 102,375 Trade & Other Receivables 327,611 277,467 Inventory 331,863 297,654 Prepaid Expenses 101,565 114,813 Total Current Assets 870,828 792,309 Noncurrent Assets Property, Plant & Equipment Intangibles 135,754 166,481 Total Noncurrent Assets 7,500 7,500 TOTAL ASSETS 143,254 173,981 1,014,082 966,290 Liabilities and Shareholders’ Equity Current Liabilities Trade & Other Payables Unearned Revenues 238,000 208,703 Notes Payables - current 107,508 82,456 Total Current Liabilities 45,000 45,000…arrow_forwardQuestion 9 0.75 pts What is the amount of Net sales on the CONSOLIDATED STATEMENTS OF INCOME of TRACTOR SUPPLY for 2023. CONVERT the number presented in the CONSOLIDATED STATEMENTS OF INCOME to actual dollars. TRACTOR SUPPLY presents its financial statements in thousands of dollars. For example, if the Net sales amount shown is 5,324, then multiply 5,324 by $1,000 and enter 5324000. Enter numbers only; DO NOT enter a dollar sign ($) or commas (.). Question 10 0.75 pts What is the amount of Net income shown on the CONSOLIDATED STATEMENTS OF INCOME of TRACTOR SUPPLY? CONVERT the number presented on the CONSOLIDATED STATEMENTS OF INCOME to actual dollars. TRACTOR SUPPLY presents its financial statements in thousands of dollars. For example, if the Net income balance shown is 5,324, then multiply 5,324 by $1,000 and enter 5324000. Enter numbers only; DO NOT enter a dollar sign ($) or commas (.).arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Corporate Financial AccountingAccountingISBN:9781305653535Author:Carl Warren, James M. Reeve, Jonathan DuchacPublisher:Cengage Learning
Corporate Financial Accounting
Accounting
ISBN:9781305653535
Author:Carl Warren, James M. Reeve, Jonathan Duchac
Publisher:Cengage Learning
How To Analyze an Income Statement; Author: Daniel Pronk;https://www.youtube.com/watch?v=uVHGgSXtQmE;License: Standard Youtube License