Question

Condensed statement of financial position and income statement data for Bellevue Corporation follow: 2016 BELLEVUE CORPORATION Statement of Financial Position December 31 2018 2017 Assets Current assets Cash $25,300 $20,100 Accounts receivable (net) 55,300 Inventory 100,400 84,600 Total current assets 181,000 150,100 Long-term investments 53,000 74,300 Property, plant, and equipment (net) 501,000 370,200 Total assets $735,000 $594,600 Liabilities and Shareholders' Equity Liabilities Current liabilities $84,700 $80,600 Non-current liabilities 155,500 85,100 Total liabilities 240,200 165,700 Shareholders' equity Common shares 328,900 302,700 Retained earnings 165,900 126,200 Total shareholders' equity 494,800 428,900 Total liabilities and shareholders' equity $735,000 $594,600 $17,900 48,300 63,800 130,000 44,600 258,800 $433,400 $30,300 20,000 50,300 299,600 83,500 383,100 $433,400 BELLEVUE CORPORATION Income Statement Year Ended December 31 2018 Sales $744,700 Less: Sales returns and allowances 40,100 Net sales 704,600 Cost of goods sold 454,200 Gross profit 250,400 Operating expenses 150,900 Income from operations 99,500 Interest expense 10,100 Income before Income tax 89,400 Income tax expense 17,880 Net income $71,520 2017 $499,400 50,000 449,400 298,500 150,900 83,200 67,700 4,110 63,590 12,718 $50,872 Additional information: 1. The allowance for doubtful accounts was $4,900 in 2016, $4,600 in 2017, and $5,000 in 2018. 2. All sales were credit sales. 3. Net cash provided by operating activities was $120,600 in 2017 and $103,000 in 2018. 4. Net capital expenditures were $150,900 for 2017 and $181,000 for 2018.

(Round answers to 1 decimal place, e.g. 5.2:1 or 5.2% or 5.2. Enter negative answers preceeding either - sign, e.g. -45 or in parentheses, e.g. (45).)

Answer 1

1.

Current ratio = Current assets / Current liabilities

2018 = 181000 / 84700

2018 = 2.1:1

2017 = 150100 / 80600

2017 = 1.9:1

2.

Receivables turnover ratio = Credit sales / average account receivables

2018 = 704600 / 55300 + 45400 /2

2018 = 14.0 times

2017 = 449400 / 45400 + 48300 /2

2017 = 9.6 times

Note:

As net accounts receivable is given in the balance sheet thus, allowance for doubtful accounts is not considered for computation of average receivables.

3.

Inventory turnover ratio = Cost of goods sold / average inventory

2018 = 454200 / 100400 + 84600 /2

2018 = 4.9 times

2017 = 298500 / 84600 + 63800 /2

2017 = 4.0 times

4.

Debt to total assets = Total debts / Total assets

2018 = 240200 / 735000

2018 = 0.33 or 33%

2017 = 165700 / 594600

2017 = 0.28 or 28%

5.

Times interest earned ratio = EBIT / Interest expense

2018 = 99500 / 10100

2018 = 9.8 times

2017 = 67700 / 4110

2017 = 16.5 times

6.

Free cash flow = Cash from operations - Capital expenditures

2018 = 103000 - 181000

2018 = - 78000

2017 = 120600 - 150900

2017 = -30300

7.

Gross profit margin = Gross profit / net sales * 100

2018 = 250400 / 704600 * 100

2018 = 35.5%

2017 = 150900 / 449400 * 100

2017 = 33.6%

8.

Profit margin = net profit / net sales * 100

2018 = 71520 / 704600 * 100

2018 = 10.1%

2017 = 50872 / 449400 * 100

2017 = 11.3%

9.

Asset turnover ratio = Net sales / average total assets

2018 = 704600 / 735000 + 594600 / 2

2018 = 1.1 times

2017 = 449400 / 594600 + 433400 /2

2017 = 0.9 times

10.

Return on assets = net income / average total assets

2018 = 71520 / 735000 + 594600 / 2

2018 = 10.8%

2017 = 50872 / 594600 + 433400 /2

2017 = 10%