Intermediate Accounting Assignment
Part A - Vince Corporation has current assets of $300,000 and current liabilities of $175,000.
Compute the effect of each of the following transactions on Vince's current ratio:
- Refinanced a $50,000 long-term mortgage with a short-term note.
- Purchasing $80,000 of merchandise inventory with short-term accounts payable.
- Paying $30,000 of short-term accounts payable.
- Collecting $40,000 of short-term accounts receivable.
Part B - Selected data of the Peninsula Company follow:
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As of December 31
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Balance Sheet Data
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2014
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2013
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Accounts receivable
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$671,000
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$642,000
|
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Allowance for doubtful accounts
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31,000
|
22,000
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Net accounts receivable
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$640,000
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$620,000
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Inventories-lower of cost or market
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$542,500
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$642,500
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Year Ended December 31
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Income Statement Data
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2014
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2013
|
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Net credit sales
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$3,150,000
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$3,000,000
|
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Net cash sales
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800,000
|
600,000
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Net sales
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$3,950,000
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$3,600,000
|
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Cost of goods sold
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$2,370,000
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$2,160,000
|
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Selling, general, and administrative expenses
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475,000
|
350,000
|
|
Other
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150,000
|
125,000
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Total operating expenses
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$2,995,000
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$2,635,000
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Net income
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$955,000
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$965,000
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- What is the accounts receivable turnover for 2014?
- What is the inventory turnover for 2014?
Part C - Selected information taken from the 2014 annual report of Aardvark Company follows. During 2014, the company had no nonoperating or nonrecurring items included in income and had no outstanding preferred stock.
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($ in millions)
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2014
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2013
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Sales
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$19,903
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$18,781
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Interest expense
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130
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169
|
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Net income
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1,153
|
1,088
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Total assets
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12,673
|
12,461
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Dividends
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(153)
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(131)
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Total stockholders' equity
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$4,288
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$4,007
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Assumed tax rate
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35%
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35%
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Industry ROA
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7.32%
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|
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Industry operating profit margin
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6.1%
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For 2014, calculate:
a. ROA
b. ROCE
c. Operating profit margin
d. Asset turnover.
Round your percentage answers to one decimal place. For example, .1234 = 12.3%.