Sandhill Co. has these comparative balance sheet data: Additional information for 2017: 1. Net...

Question:

Sandhill Co. has these comparative balance sheet data:

SANDHILL CO.
Balance Sheets
December 31
2017 2016
Cash $ 33,450 $ 66,900
Accounts receivable (net) 156,100 133,800
Inventory 133,800 111,500
Plant assets (net) 446,000 401,400
$769,350 $713,600
Accounts payable $ 111,500 $ 133,800
Mortgage payable (15%) 223,000 223,000
Common stock, $10 par 312,200 267,600
Retained earnings 122,650 89,200
$769,350 $713,600

Additional information for 2017:

1. Net income was $34,100.
2. Sales on account were $377,100. Sales returns and allowances amounted to $27,600.
3. Cost of goods sold was $200,200.
4. Net cash provided by operating activities was $56,000.
5. Capital expenditures were $28,200, and cash dividends were $19,300.

Compute the following ratios at December 31, 2017. (Round current ratio and inventory turnover to 2 decimal places, e.g. 1.83 and all other answers to 1 decimal place, e.g. 1.8. Use 365 days for calculation.)

(a) Current ratio. enter current ratio rounded to 2 decimal places : 1
(b) Accounts receivable turnover. enter accounts receivable turnover in times rounded to 1 decimal place times
(c) Average collection period. enter average collection period in days rounded to 1 decimal place days
(d) Inventory turnover. enter inventory turnover in times rounded to 2 decimal places times
(e) Days in inventory. enter days in inventory rounded to 1 decimal place days
(f) Free cash flow. enter free cash flow in dollars rounded to 1 decimal place $

Financial Ratios:

Financial ratios are used by investors to measure the financial health of a company and thereby evaluate its attractiveness as an investment opportunity. There are various categories of ratios including (1) liquidity, (2) activity, (3) solvency, (4) profitability, and (5) market. These ratios may be compared over time in a trend analysis or to other companies in an industry analysis.

Answer and Explanation: 1

Become a Study.com member to unlock this answer!

View this answer

RatioFormulaCalculationResult
(a) Current ratio. Current Assets / Current Liabilities ($33,450 + $156,100 + 133,800) / $111,500 2.90 : 1
(b) Accounts...

See full answer below.


Learn more about this topic:

Loading...
Financial Ratio Calculation and Analysis

from

Chapter 8 / Lesson 5
6.7K

Explore the types of analysis of financial ratios. Learn the definition of a financial ratio and find the calculation and interpretation of a financial ratio.


Related to this Question

Explore our homework questions and answers library