Author Question: Ottoman Manufacturing Company reported net sales (all credit) of $120,000 and $140,000 for 2020 and ... (Read 40 times)

jordangardner · **on:** Feb 5, 2023

Ottoman Manufacturing Company reported net sales (all credit) of $120,000 and $140,000 for 2020 and 2021, respectively and net income of $24,000 and $32,000 for 2020 and 2021, respectively. Ottoman's 2020 and 2021 balance sheets appear below:

2020

2021

Current Assets
Cash	$ 16,000	$ 15,000
Accounts receivable, net	20,000	19,000
Inventory	30,000	28,000
Total current assets	66,000	62,000
Plant & equipment, net	60,000	40,000
Total assets	$126,000	$102,000

Current liabilities	$ 20,000	$ 30,000
Noncurrent liabilities	60,000	40,000
Total liabilities	80,000	70,000
Stockholders' equity
Common stock	2,000	2,000
Additional paid-In capital	4,000	4,000
Retained earnings	40,000	26,000
Total stockholders' equity	46,000	32,000
Total liabilities and stockholders' equity	$126,000	$102,000

Required:

a.	Calculate the working capital for 2021.

b.	Calculate the accounts receivable turnover for 2021.

c.	Calculate the debt ratio for 2021.

khammond77 · **Reply #1 on:** Feb 5, 2023

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