60.1K

Verified Solution

Link Copied!

Combining the information provided by various ratios can enhance your understanding of the financial condition of a business.

Comparative financial statements for Na Pali Coast Company for the years ending December 31, 20-1 and 20-2 are provided.

Na Pali Coast Company Comparative Income Statement For Years Ended December 31, 20-2 and 20-1
	20-2	20-1
Net Sales	$466,451	$291,613
Cost of goods sold	285,889	188,626
Gross profit	$180,562	$102,987
Operating expenses	125,650	78,200
Operating income	$54,912	$24,787
Other expenses	1,200	500
Income before income taxes	$53,712	$24,287
Income tax expense	18,250	7,285
Net income	$ 35,462	$17,002

Na Pali Coast Company Comparative Balance Sheet December 31, 20-2 and 20-
	20-2	20-1
Assets
Current assets:
Cash	$8,600	$7,500
Government notes	3,000	2,000
Accounts receivable (net)	10,500	8,600
Merchandise inventory	53,600	33,200
Supplies and prepayments	4,500	3,200
Total current assets	$80,200	$54,500
Property, plant, and equipment:
Land	$40,000	$40,000
Building (net)	200,000	150,000
Delivery equipment (net)	13,000	15,000
Office equipment (net)	5,400	6,000
Patents	5,000	6,000
Total property, plant, and equipment	$263,400	$217,000
Total assets	$343,600	$271,500
Liabilities
Current liabilities:
Notes payable	$5,000	$3,000
Accounts payable	28,700	22,300
Accrued and withheld payroll taxes	4,200	5,600
Accrued interest payable	500	1,700
Total current liabilities	$ 38,400	$32,600
Long-term liabilities:
Bonds payable	50,000	20,000
Total liabilities	$88,400	$52,600
Stockholders' Equity
Common stock ($5 par)	$115,000	$100,000
Paid-in capital in excess of par	65,000	60,000
Retained earnings	75,200	58,900
Total stockholders' equity	$255,200	$218,900
Total liabilities and stockholders' equity	$343,600	$271,500

Using the above information, respond to the following questions:

1. Compute the average number of days required to sell inventory and collect cash from customers buying on account. Round your answers to two decimal places. 2. Note that Na Pali Coast Company also buys inventory on account. On average, how many days pass before Na Pali pays its creditors? Rounc your answer to two decimal places. X days 3. Using the information from your answers to parts (1) and (2), compute the number of days from the time Na Pali Coast pays for inventory until it receives cash from customers on account. Round your answer to two decimal places. X days Feedback Theck My Work If you remember how to compute cost of goods sold, you can use the information provided to compute purchases and the average payment period. 1. Compute the average number of days required to sell inventory and collect cash from customers buying on account. Round your answers to two decimal places. 2. Note that Na Pali Coast Company also buys inventory on account. On average, how many days pass before Na Pali pays its creditors? Rounc your answer to two decimal places. X days 3. Using the information from your answers to parts (1) and (2), compute the number of days from the time Na Pali Coast pays for inventory until it receives cash from customers on account. Round your answer to two decimal places. X days Feedback Theck My Work If you remember how to compute cost of goods sold, you can use the information provided to compute purchases and the average payment period

Answer & Explanation Solved by verified expert

See Answer