Beruflich Dokumente
Kultur Dokumente
Brian Powell
9/11/11
3-11) Complete the balance sheet and sales information in the table that follows for Hoffmeister
Industries using the following financial date:
Debt Ratio: 50%
Quick Ratio: 0.80
Total Assets turnover: 1.5
Days sales outstanding: 36.5 days
Gross profit margin on sales: (Sales-Cost of goods sold)/Sales =25%
Inventory turnover ratio: 5.0
-To find Total liabilities and equity for the balance sheet below we must take look at total asset which
was provided to us from the book at $300,000. These two items must be equal to each other. Since total
assets is $300,000 we can assume that total liabilities and equity is also $300,000
-To find Sales for the balance sheet below we must take what we know the equation to find total asset
turnover is sales/total assets=total asset turnover. Our book has given the information of a total asset
turnover of 1.5. So sales/300,000=1.5 sales must equal $450,000
-To find Inventories for the balance sheet below we must take what the book gives us and what we have
figured out. Inventory turnover equation is sales/inventory=inventory turnover. What I have figured out
is that 450,000/inventory=5.0. With this knowledge inventory must equal 90,000
-To find Account Receivables for the balance sheet below we must find out the missing information from
the days sales outstanding formula, which is DSO=Receivables/annual sales/365. By putting in the
numbers it would look something like 36.5=receivables/(450,000)/(365) then the following step would
make the equation look like 36.5=receivables/1232.88 then we would multiply both sides by 1232.88 to
get a receivable number of 45,000.
To find Cost of goods sold for the balance sheet below we must take the percentage that they give us in
the book which is 25%. Then we must take the equation (sales-cost of goods sold)/sales=Gross profit
margin on sales. The numbers will look like this. 25%= (450,000-Cost of good sold)/450,000). Once you
solve for X (cost of good sold) you will come up with a number 337500.
Next we have to get the total liabilities with the debt ratio being at 50% which was given. Since total
assets is at 300,000 we will take half of 300,000 and will get 150,000 as our total liability and 150,000 as
our total equity.
To find Common stock for the balance sheet below we must take we must take what we have learned
that total equity is only 150,000 and we must minus it from retained earning of 97,500 to get us a total
of 52500 for common stock.
To find account payable for the balance sheet below we must take total liabilities and equity as our
benchmark and minus everything we have just uncovered to get out accounts payable of 90,000. All I did
was subtracted 300,000-97,500-52,500-60,000=90,000
To find cash for the balance sheet below we must figure out what current asset is. To do that we must
take what was given of a quick ratio of .80. So current asset (X)-Inventories/Current liabilies. The
equation will look a lot like X-90,000/90,000=.80. To go a step future we will multiple each side by 90000
to get X-90000=72,000 then we will take it a step future and add 90,000 to each side to get 162,000 as
our current assets. Since we already know two of our assets we will just have to substract to find cash.
162,000-90000(inventory)-45,000(Account Receivables)= Cash of 27,000
To find fixed assets for the balance sheet below we must take Once I knew all of the above information
from cash,account receivables to inventories all I did was subtracted everything from Total asset to get
my fixed assets of 138,000. The equation looked a lot like 300,000(Total assets)- 90,000(Inventories)-
45,000(Account Receivables)- 27,000(Cash).
Balance Sheet:
Finding out information on a balance sheet is a lot of work but to a business owner taking the time to do
it and do it correctly is well worth the effort. It not only shows the managers where they stand it shows
where they might be lacking in certain departments. The main things all accountants must remember is
that total assets MUST equal total liabilities and equity or else their balance sheet will not ever balance
properly. Many of the equations took many hours to figure out, because knowing what is a fixed asset
along with a current liability when it is not always painted black and white it makes the problem that
much more challenging. With less clues about what certain things are in a balance sheet always start
with total assets or total liabilities and equity. With this information all other answers will begin to
follow with the right formulas.
Managers need to play close attention to the balance sheet as it will help determine if overspending has
occurred or if certain future investment can be made. As you can see in this problem with 27,000$ of
cash on hand Hoffmeister Industries can make a sizable investment in new equipment or even some
stocks and bonds to create future revenue.