Average Stock Turnover Ratio in Apparel Industry by qfh10478

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									                                                                        Student Name:
                                                                                Class:
                                                                                         Problem 24-01A

                                                                CALIFORNIA COMPUTER COMPANY
                                                                        Financial Ratios

                                                                                                          2008            2007

                                                  Current Assets
     Current Ratio       =                                                               =           =           :1   =          :1
                                                 Current Liabilities



                                   Cash + Receivables + Marketable Securities
    Acid Test Ratio      =                                                               =           =                =
                                               Current Liabilities



                                              Cost of Goods Sold
  Inventory Turnover     =                                                               =           =                =
                                         Average Merchandise Inventory



                                              Net Income after Taxes
   Return on Sales       =                                                               =           =                =
                                                     Net Sales



 Earnings per share of       Net Income after Taxes - Preferred Dividend Requirement
                         =                                                           =               =                =
   Common Stock                    Average number of shares of Common Stock



Book Value per Share of        Total Stockholders' Equity - Equity of Preferred Stock
                        =                                                                =           =                =
   Common Stock                   Number of Common Stock shares outstanding



                                         Income before interest and taxes
Return on Total Assets =                                                                 =           =                =
                                                  Total Assets



Ratio of Stockholder's                         Stockholders' Equity
                         =                                                               =           =                =
Equity to Total Equities                          Total Equities



Rate of Return on Total                            Net Income
                        =                                                                =           =                =
 Stockholders' Equity                          Stockholders' Equity



                                                    Net Sales
    Asset Turnover       =                                                               =           =                =
                                                   Total Assets



 Accounts Receivable                               Net Sales
                         =                                                               =           =                =
      Turnover                            Average Accounts Receivable
Given Data P24-01A

                     CALIFORNIA COMPUTER COMPANY
                        Comparative Income Statement
               For the Years Ended December 31, 2008 and 2007

Revenue:                                             2008        2007
Sales                                               667,800     598,950
Less Sales Returns and Allowances                    12,500      11,650
Net Sales                                           655,300     587,300

Cost of Goods Sold
Merchandise Inventory, January 1                     82,500      79,045
Net Purchases                                       315,510     260,000
Total Merchandise Available for Sale                398,010     339,045
Less Merchandise Inventory, December 31              85,000      82,500
Cost of Goods Sold                                  313,010     256,545

Gross Profit on Sales                               342,290     330,755

Operating Expenses
Selling Expenses
 Sales Salaries Expense                              84,900      78,000
 Payroll Tax Expense-Selling                          8,490       7,800
 Other Selling Expenses                              25,800      15,200
Total Selling Expenses                              119,190     101,000

General and Administrative Expenses
 Officers Salaries Expense                          125,000     105,000
 Payroll Tax Expense-Administrative                  12,500      10,500
 Depreciation Expense                                 8,250       8,250
 Other General and Administrative Expenses            9,450       7,000
Total General and Administrative Expenses           155,200     130,750

Total Operating Expenses                            274,390     231,750

Net Income Before Income Taxes                       67,900      99,005
Income Tax Expense                                   11,975      21,912
Net Income After Income Taxes                        55,925      77,093


                        CALIFORNIA COMPUTER COMPANY
                            Comparative Balance Sheet
                           December 31, 2008 and 2007

Assets
Current Assets
 Cash                                                92,645      79,656
 Accounts Receivable                                 85,600      62,000
 Merchandise Inventory                               85,000      82,500
 Prepaid Expenses                                     5,800       5,600
 Supplies                                               395         434
Total Current Assets                                   269,440     230,190

Property, Plant, and Equipment
 Land                                                   75,000      75,000
 Building and Equipment                                 82,500      82,500
 Less Accumulated Depreciation                         (33,000)    (24,750)
 Net Book Value-Building and Equipment                  49,500      57,750
Total Property, Plant, and Equipment                   124,500     132,750

Total Assets                                           393,940     362,940

Liabilities and Stockholders' Equity
Current Liabilities
 Accounts Payable                                       26,397      45,542
 Sales Tax Payable                                       3,500       3,000
 Payroll Taxes Payable                                   1,145       1,025
 Income Taxes Payable                                    1,000       5,000
Total Current Liabilities                               32,042      54,567

Long-Term Liabilities
 Mortgage Payable                                       42,600      45,000
Total Long-Term Liabilities                             42,600      45,000

Total Liabilities                                       74,642      99,567

Stockholders' Equity
 Common Stock ($1 par, 10,000 shares authorized
  10,000 shares issued and outstanding)                 10,000      10,000
 Paid-in-Capital - Common Stock                         12,500      12,500
 Retained Earnings                                     296,798     240,873
Total Stockholders' Equity                             319,298     263,373

Total Liabilities and Stockholders' Equity             393,940     362,940


                              Additional Information

All sales are credit sales
Merchandise Inventory, December 31, 2006                          $80,000
Net Accounts Receivable on December 31, 2006                      $68,000

Selected ratios for other companies in industry:

Rate of return on stockholders' equity                            20%
Stockholders' equity to total equities                            60%
Asset turnover                                                    2.5:1
Merchandise inventory turnover                                    7.5 times
                                    Student Name:
                                            Class:
                                                     Problem 24-02A

                                REDLEGS APPAREL COMPANY
                                     Financial Ratios

                                                                      2008       2007


     Current Ratio         =                         =           =           =




    Acid Test Ratio        =                         =           =           =




  Inventory Turnover       =                         =           =           =




    Return on Sales        =                         =           =           =




   Rate of Return on
                           =                         =           =           =
  Stockholders' Equity



 Earnings per share of
                           =                         =           =           =
   Common Stock




Book Value per Share of
                        =                            =           =           =
    Common Stock




Return on Total Assets     =                         =           =           =




Ratio of Stockholder's
                         =                           =           =           =
Equity to Total Equities




 Asset Turnover Ratio      =                         =           =           =




 Ratio of Stockholders'
                            =                        =           =           =
Equity to Total Liabilities
Given Data P24-02A

                        REDLEGS APPAREL COMPANY
                        Comparative Income Statement
               For the Years Ended December 31, 2008 and 2007

Revenue:                                             2008        2007
Sales                                               565,950     505,650
Less Sales Returns and Allowances                    12,500       4,500
Net Sales                                           553,450     501,150

Cost of Goods Sold
Merchandise Inventory, January 1                     29,500      32,000
Net Purchases                                       294,520     239,650
Total Merchandise Available for Sale                324,020     271,650
Less Merchandise Inventory, December 31              35,000      29,500
Cost of Goods Sold                                  289,020     242,150

Gross Profit on Sales                               264,430     259,000

Operating Expenses
Selling Expenses
 Sales Salaries Expense                              90,000      85,000
 Payroll Tax Expense-Selling                          9,000       8,500
 Other Selling Expenses                              20,000      15,600
Total Selling Expenses                              119,000     109,100

General and Administrative Expenses
 Officers Salaries Expense                          105,000      85,500
 Payroll Tax Expense-Administrative                  10,500       8,550
 Depreciation Expense                                 8,250       8,250
 Other General and Administrative Expenses            6,900       7,500
Total General and Administrative Expenses           130,650     109,800

Total Operating Expenses                            249,650     218,900

Net Income Before Income Taxes                       14,780      40,100
Income Tax Expense                                    2,217       1,185
Net Income After Income Taxes                        12,563      38,915


                        CALIFORNIA COMPUTER COMPANY
                            Comparative Balance Sheet
                           December 31, 2008 and 2007

Assets
Current Assets
 Cash                                                65,495      69,450
 Accounts Receivable                                 25,450      36,500
 Merchandise Inventory                               35,000      29,450
 Prepaid Expenses                                     1,800       1,600
 Supplies                                               450         275
Total Current Assets                              128,195    137,275

Property, Plant, and Equipment
 Land                                              80,000     80,000
 Building and Equipment                            72,500     72,500
 Less Accumulated Depreciation                    (21,750)   (14,500)
 Net Book Value-Building and Equipment             50,750     58,000
 Store Equipment                                   15,000     15,000
 Less Accumulated Depreciation                     (3,000)    (2,000)
 Net Book Value-Store Equipment                    12,000     13,000
Total Property, Plant, and Equipment              142,750    151,000

Total Assets                                      270,945    288,275

Liabilities and Stockholders' Equity
Current Liabilities
 Accounts Payable                                  17,003     44,783
 Sales Tax Payable                                  3,000      2,200
 Payroll Taxes Payable                              1,037      1,450
 Income Taxes Payable                                   0        500
Total Current Liabilities                          21,040     48,933

Long-Term Liabilities
 Notes Payable                                     36,000     38,000
Total Long-Term Liabilities                        36,000     38,000

Total Liabilities                                  57,040     86,933

Stockholders' Equity
 Common Stock ($1 par, 50,000 shares authorized
  50,000 shares issued and outstanding)            50,000     50,000
 Paid-in-Capital - Common Stock                    36,000     36,000
Total Paid-in Capital                              86,000     86,000
Retained Earnings
 Unappropriated Retained Earnings                 102,905    115,342
 Appropriated Retained Earnings                    25,000          0
Total Retained Earnings                           127,905    115,342
Total Stockholders' Equity                        213,905    201,342

Total Liabilities and Stockholders' Equity        270,945    288,275
                               Student Name:
                                       Class:
                                                Problem 24-03A


                            MEIGS, INC. and POLK, INC.
                                Financial Ratios

                                                           Meigs, Inc.   Polk, Inc.


Rate of Return on Sales =                       =           =            =




Rate of Return on Total
                        =                       =           =            =
        Assets



  Rate of Return on
                        =                       =           =            =
 Stockholders' Equity




  Earnings per share    =                       =           =            =




Stockholder's Equity to
                        =                       =           =            =
    Total Equities




     Current Ratio      =                       =           =            =




    Asset Turnover      =                       =           =            =




Book Value per Share of
                        =                       =           =            =
    Common Stock
Given Data P24-03A

                           MEIGS, INC. and POLK, INC.
                         Condensed Financial Statements

                                Income Statements
                          Year Ended December 31, 2007

                                                     Meigs, Inc.   Polk, Inc.
Sales                                                $641,900      $795,500
Cost of Goods Sold                                    395,000       567,500
Gross Profit                                          246,900       228,000
Operating Expenses                                    169,500       195,000
Net Income From Operations                             77,400        33,000
Interest Expense                                       10,000              0
Net Income Before Income Taxes                         67,400        33,000
Income Tax                                             16,850         8,250
Net Income After Income Taxes                         $50,550       $24,750

                                  Balance Sheets
                                 December 31, 2007

                   Assets                            Meigs, Inc.   Polk, Inc.
Current Assets                                        $80,000      $103,600
Property, Plant, and Equipment                        175,000       196,000
Total Assets                                         $255,000      $299,600

   Liabilities and Stockholders' Equity
                   Liabilities
Current Liabilities                                      $45,500    $78,500
Total Long-Term Liabilities (Bonds Payable)              100,000          0
Total Liabilities                                        145,500     78,500

             Stockholders' Equity
 Common Stock ($10 par value)                          20,000        20,000
Retained Earnings                                      89,500       201,100
Total Stockholders' Equity                            109,500       221,100
Total Liabilities and Stockholders' Equity           $255,000      $299,600

								
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