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Author Question: The balance sheet and income statement for Johnson and Breakwater is presented below. Balance ... (Read 487 times)

HCHenry

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The balance sheet and income statement for Johnson and Breakwater is presented below.
 
  Balance Sheet (000)
  Cash 500
  Accounts receivable 1,500
  Inventories 500
  Current assets 2,500
  Net fixed assets 5,000
  Total Assets 7,500
  Accounts payable 1,200
  Bank note 300
  Total current liabilities 1,500
  long-term debt 4,000
  Common stock 300
  Retained earnings 1,700
  Total liabilities and owners' equity 7,500
  Income Statement (000)
  Net sales 8,500
  Cost of goods sold (3,400)
  Gross profit 5,100
  Operating expenses (2,900)
  Net operating income 2,200
  Interest expense (580)
  Earnings before taxes 1,620
  Income tax (34) (551)
  Net income 1,069
  a. Compute the following ratios: Current ratio, Acid test ratio, Debt ratio, Total asset turnover, Operating
  profit margin, Return on total investments, Times interest earned, Inventory turnover.
  b. All other things equal, compute the dollar amount of sales needed to achieve an 18 return on total assets
  for the coming year.
  c. Given Johnson's inventory turnover ratio, find a way of computing the current level of inventory given this
  ratio and assuming the current level of inventories is unknown. Set up but do not solve.

Question 2

Which of the following could be considered a form of perpetuity?
 
  A) The college tuition payments that students make for four years.
  B) A 20-year corporate bond.
  C) A university scholarship endowment that promises to pay out 10,000 per year for an indefinite time period.
  D) A contract from the winning lottery ticket to receive cash flows for the next 30 years.


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yifu223

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