Problem 13-4 (Part Level Submission) The following financial information is for
ID: 2525423 • Letter: P
Question
Problem 13-4 (Part Level Submission) The following financial information is for Wildhorse Company WILDHORSE COMPANY Balance Sheets December 31 2017 2016 Assets Cash Debt investments (short-term) Accounts receivable Inventory Prepaid expenses Land Building and equipment (net) Total assets Liabilities and Stockholders' Equity Notes payable Accounts payable Accrued liabilities Bonds payable, due 2020 Common stock, $10 par Retained earnings Total liabilities and stockholders' equity $ 71,000 67,000 40,000 92,000 239,000 168,000 22,000 130,000 130,000 263,000 185,000 $893,000 $704,000 53,000 107,000 30,000 $171,000 $104,000 55,000 41,000 251,000 172,000 200,000 200,000 163,000 132,000 $704,000 67,000 41,000 $893,000Explanation / Answer
Accounts Receivables Turnover = Credit Sales / AvInerage Receivables
2016 : 793,000 / [(89,000 +92,000)/2] = 8.8 times
2017 : 893,000 / [(92,000+107000)/2] = 8.9 times
Inventory Turnover Ratio= Cost of Goods Sold / Average Inventory
2016 : 575,000/ [(115,000 +168,000)/2] = 4.1 times
2017 : 644,000 / [(239,000 + 168,000)/2] = 3.2 times
Profit Margin = Net Income / Sales Revenue
2017: 59,000/ 893,000 = 6.6%
2016: 57,000/ 793,000= 7.2%
Asset Turnover = Sales / Average Assets
2017: 893,000 / [(893,000+704,000)/2] = 1.12 times
2016 :793,000 / [(637,000+704,000)/2] = 1.19 times
Return on Assets = Net Income / Total Assets
2017 : 59,000 / 893,000 = 6.6%
2016 : 57,000/ 704,000 = 8.1%
Earnings per Share = Net Income / No of shares of common stock
2017 : 59,000 / 20,000 = 3
2016 : 57,000/20,000 = 2.8
2017 2016 Current Assets Cash 71,000 67,000 Debt instruments 53,000 40,000 Accounts Receivable 107,000 92,000 Inventory 239,000 168,000 Prepaid Expenses 30,000 22,000 Total Current Assets 500,000 389,000 Current Liabilities Notes Payable 171,000 104,000 Accounts Payable 67,000 55,000 Accrued Liabilities 41,000 41,000 Total Current Liabilities 279,000 200,000 Current Ratio = Current Assets/ Current Liabities Current Ratio 1.79 1.95