"33. The following data are from Sharon Stone and Gravel, Inc., financial statements. The firmmanufactures home decorative material. Sales (all credit) were $60 million for 2008.Sales to total assets......................................... 3.0 timesTotal debt to total assets ................................. 40%Current ratio ................................................... 2.0 timesInventory turnover ......................................... 10.0 timesAverage collection period .............................. 18.0daysFixed asset turnover ....................................... 7.5 timesFill in the balance sheet:Cash..................................... ______ Current debt .......................................... ............................... _____t_Accounts receivable ............ ______ Long-term debt...................................... ______Inventory ............................. ______ Total debt ........................................ ______Total current assets ....... ______ Equity .................................................... ______Fixed assets ......................... ______Total assets .................... ______ Total debt and stockholders ? equi___ ty ___3-33. Solution:Sharon Stone and Gravel, Inc.Sales/total assets = 3.0xTotal assets = $60 million/3.0Total assets = $20 millionTotal debt/total asset = 40%Total assets = $20 million x .4Total assets = $8 millionSales/inventory = 10.0xInventory = $60 million/10.0xInventory = $6 millionAverage daily sales = $60 million/360 days = $166,667 per dayAccounts receivable = 18 days × $166,667 = $3 million (or)S3-50 3-33. (Continued)$60 million Accounts receivable = = $3,000,000360 18 Fixed assets = $60 million/7.5x = $8 millionCash = Total assets? inventory ?accounts receivable ? fixed assets = $20 million? m $6illio mn il lion ? ? $3 $8 million = $3 millionCurrent assets = Cash + accounts receivable + inventory = $3 million + $3 million + $6 million = $12 millionCurrent debt = Current assets/2× = $12 million/2 = $6 millionLong-term debt = Total debt? current debt= $8 million? $6 million= $2 millionEquity = Total assets ? total debt= $20 million? $8 million= $12 millionS3-51 3-33. (Continued)Cash................. $3.0 million Current$6.0 milliondebt.............Accounts Long-termreceivable..... $3.0 debt............. $2.0Inventory......... $6.0 Total debt....... $8.0Total current Equity............. $12.0assets............ $12.0Fixed assets..... $8.0Total assets..... $20.0 million Total debt and $20.0 millionequity...........S3-52 34. Using the financial statements for the Goodyear Calendar Company, calculate the 13 basicratios found in the chapter.GOODYEAR CALENDAR COMPANYBalance Sheet December 31, 2008AssetsCurrent assets:Cash..............................................................................................$ 40,000Marketable securities ...................................................................30,000Accounts receivable (net) ............................................................120,000Inventory ......................................................................................180,000Total current assets ...................................................................$370,000Investments ......................................................................................40,000Plant and equipment .........................................................................450,000Less: Accumulated depreciation ..................................................(100,000)Net plant and equipment ...........................................................350,000Total assets .......................................................................................$760,000GOODYEAR CALENDAR COMPANYLiabilities and Stockholders ? Equity Current liabilities: Accounts payable .........................................................................$90,000Notes payable ...............................................................................10,000Accrued taxes ............................................................................... 10,000Total current liabilities ..............................................................110,000Long-term liabilities: Bonds payable ..............................................................................170,000Total liabilities ..........................................................................280,000Stockholders ? ................................equity .......................................Preferred stock, $100 par value ...................................................90,000Common stock, $1 par value .......................................................60,000Capital paid in excess of par ........................................................230,000Retained earnings .........................................................................100,000Total stockholders? equity .......................................................480,000Total liabilities and stockholders ? ................................equity .......$760,000S3-53 GOODYEAR CALENDAR COMPANYIncome Statement For the Year Ending December 31, 2008Sales (on credit)................................................................................$2,000,000Less: Cost of goods sold ..............................................................1,300,000Gross profit ......................................................................................700,000Less: Selling and administrative expenses ...................................400,000*Operating profit (EBIT) ...................................................................300,000Less: Interest expense .................................................................. 20,000Earnings before taxes (EBT) ............................................................280,000Less: Taxes................................................................................... 112,000Earnings after taxes (EAT)...............................................................$ 168,000*Includes $10,000 in lease payments.3-34. Solution:Goodyear Calendar CompanyProfitability ratiosProfit margin = $168,000/$2,000,000 = 8.40%Return on assets (investment) = $168,000/$760,000 = 22.1%Return on equity = $168,000/$480,000 = 35%Assets utilization ratiosReceivable turnover = $2,000,000/$120,000 = 16.66xAverage collection period = $120,000/$5,555 = 21.6 daysInventory turnover = $2,000,000/$180,000 = 11.11xFixed asset turnover = $2,000,000/$350,000 = 5.71xTotal asset turnover = $2,000,000/$760,000 = 2.63xLiquidity ratioCurrent ratio = $370,000/$110,000 = 3.36xQuick ratio = $190,000/$110,000 = 1.72xDebt utilization ratiosDebt to total assets = $280,000/$760,000 = 36.84%Times interest earned = $300,000/$20,000 = 15xFixed charge coverage = $310,000/$30,000 = 10.33xS3-54 "