1. Financial data for Industrial Inc follows: ($ in thousands)
|
|
Year 1
|
Year 2
|
|
Sales
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$ 271,161
|
$ 457,971
|
|
Cost of goods sold
|
249,181
|
341204
|
|
Net income
|
055,0341
|
1403,509)
|
|
Cash flow from operations
|
158,405)
|
120,431)
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|
Balance Sheet
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|
|
|
Cash
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341,180
|
268,872
|
|
Marketable securities
|
341,762
|
36,900
|
|
Accounts receivable
|
21,011
|
35,298
|
|
Inventories
|
6473
|
12,106
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|
Total current assets
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$ 710,427
|
$ 413,176
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|
Accounts payable
|
$ 28,908
|
$ 22.758
|
|
Accrued liabilities
|
44,310
|
124,851
|
|
Total current liabilities
|
$ 73,218
|
$ 147,610
|
a. Calculate the current and quick ratio at the end of each year. How has the company's short-term liquidity changed over this period?
b. Assuming a 365-day year for all calculations, compute the following:
i. The collection period each year based on sales.
ii The inventory turnover, and the payables period each year based on cost of goods sold.
iii. The days' sales in cash each year.
iv. The gross margin and profit margin each year.
c. What do these calculations suggest about the company's performance?
2. You are trying to prepare financial statements for Bartlett Pickle Company, but seem to be missing its balance sheet. You have Bartlett's income statement, which shows sales last year were $420 million with a gross profit margin of 40 percent. You also know that credit sales equaled three-quarters of Bartlett's total revenues last year. In addition, Bartlett had a collection period of 55 days, a payables period of 40 days, and an inventory turnover of eight times based on the cost of goods sold. Calculate Bartlett's year-ending balance for accounts receivable, inventory, and accounts payable.