Discuss accounts receivable turnover

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Reference no: EM131752094

The following financial statements for Jordan Corporation should be used to calculate the following ratios.

Jordan Corporation

Balance Sheets

December 31, 2016 and 2015

     

Assets

   

Current Assets:

   

Cash

 mce_markernbsp;            250,000

 mce_markernbsp;            275,000

Accounts Receivable

                400,000

                450,000

Inventory

                600,000

                500,000

Prepaid Expenses

                  25,000

                  30,000

Total Current Assets

            1,275,000

            1,255,000

Property, Plant and Equipment:

   

Equipment

            1,000,000

                900,000

Less Accumulated Depreciation

              (200,000)

              (175,000)

Total Property, Plant and Equipment

                800,000

                725,000

Total Assets

 mce_markernbsp;        2,075,000

 mce_markernbsp;        1,980,000

Liabilities and Stockholders' Equity

   

Current Liabilities:

   

Accounts Payable

 mce_markernbsp;            430,000

 mce_markernbsp;            400,000

Notes Payable

                100,000

                  80,000

Wages Payable

                  30,000

                  20,000

Total Current Liabilities

                560,000

                500,000

Long Term Liabilities:

   

Notes Payable

                200,000

                180,000

Bonds Payable

                150,000

                200,000

Total Long Term Liabilities

                350,000

                380,000

Total Liabilities

                910,000

                880,000

Stockholders' Equity

   

Common Stock

                500,000

                500,000

Additional Paid in Capital

                100,000

                100,000

Retained Earnings

                565,000

                500,000

Total Stockholders' Equity

            1,165,000

            1,100,000

Total Liabilities and Equity

 mce_markernbsp;        2,075,000

 mce_markernbsp;        1,980,000

 

Jordan Corporation

Income Statement

Years Ended December 31, 2016 and 2015

     

Sales

 mce_markernbsp;        3,500,000

 mce_markernbsp;        3,300,000

Cost of Goods Sold

            1,200,000

            1,150,000

Gross Profit

            2,300,000

            2,150,000

Operating Expenses

            1,800,000

            1,700,000

Operating Income

                500,000

                450,000

Interest Expense

                  25,000

                  30,000

Income Before Taxes

                475,000

                420,000

Income Taxes

                100,000

                  80,000

Net Income

 mce_markernbsp;            375,000

 mce_markernbsp;            340,000

There are 100,000 shares outstanding at the end of both 2016 and 2015.

Market price per share on December 31, 2016 was $45.00 per share.

Company paid $100,000 in dividends during 2016.

Compute the following ratios:

Liquidity:

  1. Working capital
  2. Current ratio
  3. Inventory turnover
  4. Days in inventory
  5. Accounts receivable turnover
  6. Average collection period

Solvency:

  1. Debt to assets ratio
  2. Times interest earned

Profitability:

  1. Earnings per share
  2. Price earnings ratio
  3. Gross profit ratio
  4. Net profit margin ratio
  5. Return on assets
  6. Asset turnover
  7. Dividend payout ratio
  8. Return on common equity

Reference no: EM131752094

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