( Net sales $30,000 $28,000 Cost of goods sold 20,000 19,500 Gross profit 10,000 8,500 Selling, general and administrative expense 3,000 2,900 Operating income 7,000 5,600 Interest expense 100 80 Income before taxes 6,900 5,520 Income tax expense 2,000 1,600 Chapter 6: Problem 6-11 A partial balance sheet and income statement for King Corporation follow: Cash $ 33,493 Marketable securities 215,147 Trade receivables, less allowance of 6,000 255,000 Inventories LIFO 523,000 Prepaid expenses 26,180 Trade accounts payable $103,689 Notes payables (primarily to banks) and commercial paper 210,381 Accrued expenses and other liabilities 120,602 Income taxes payable 3,120 Current maturities of long term debt 22,050 Net sales $3,050,600 Miscellaneous income 45,060 $3,095,660 Costs and expenses: Cost of Sales $2,184,100 Selling,
general, and administrative expenses 350,265 Interest expense 45,600 Income taxes 300,000 $2,880,965 Net income $ 214,695 a. Working capital b. Current ratio c. Acid-test ratio d. Cast ratio e. Day’s sales in receivables f. Accounts payables g. Day’s sales in inventory h. Inventory turnover in days i. Operating cycle The following financial data were taken from the annual financial statements of Smith Corporation. 2009 2010 2011 Current assets $ 450,000 $ 400,000 $ 500,000 Current liabilities 390,000 300,000 340,000 Sales 1,450,000 1,500,000 1,400,000 Cost of goods sold 1,180,000 1,020,000 1,120,000 Inventory 280,000 200,000 250,000 Accounts receivable 120,000 110,000 105,000 1. Working capital 2. Current ratio 3. Acid-test ratio 4. Accounts receivables turnover 5. Merchandise inventory turnover 6. Inventory turnover in days