Selected Balances from a Company's Financial Statements Are Shown Below

question 127

Essay

Selected balances from a company's financial statements are shown below:
$\begin{array}{|l|r|r|r|}\hline&\text { Dec. 31, } &\text { Dec. 31, }& \text { For the }\\&2010&2011&\text { Year 2011 }\\\hline \text { Merchandise inventory } & \$ 15,000 & \$ 20,000 \\\hline \text { Accounts payable } & 32,000 & 26,000 \\\hline \text { Salaries payable } & 4,400 & 3,000 \\\hline \text { Accounts receivable } & 24,000 & 21,000 \\\hline \text { Total assets } & 234,000 & 286,000 \\\hline \text { Sales (all on credit) } & & & \$ 312,000 \\\hline \text { Cost of goods sold } & & & 165,600 \\\hline \text { Salaries expense } & & & 48,000 \\\hline \text { Other expenses } & & & 75,000 \\\hline \text { Net income } & & & 24,000\\\hline\end{array}$

Use the information above to calculate the following current year ratios:
(a)2011 Inventory turnover.
(b)Days' sales uncollected at Dec.31,2011.
(c)2011 Profit margin.
(d)2011 Return on total assets.

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Definitions:

Input/Output

A concept referring to the materials, information, or effort (input) going into a process and the resulting product, services, or results (output) produced.

Output/Input

A ratio that measures the efficiency of production or performance by comparing what is produced (output) to what is consumed or used (input).

Continuous-Process Production

A manufacturing process that produces goods continuously rather than in discrete batches, often used in industries like chemicals, oil, and gas.

Chemical Plants

Facilities where chemical processes are conducted on an industrial scale, primarily for the production of chemicals and materials.