Use the information in the table below to calculate the following ratios for Windswept Woodworks for year 1 and year 2. (Round your answers to 2 decimal places.) Windswept Woodworks, Inc. Input Data (millions of dollars) Year 2 Year 1 Accounts payable 496 434 Accounts receivable 1,340 880 Accumulated depreciation 6,806 6,682 Cash & equivalents 284 178 Common stock 1,244 1,170 Cost of goods sold 1,500 n.a. Depreciation expense ? n.a. Common stock dividends paid ? n.a. Interest expense 140 n.a. Inventory 1,074 1,076 Addition to retained earnings 602 n.a. Long-term debt 872 786 Notes payable 230 380 Gross plant & equipment 10,260 10,000 Retained earnings 3,122 2,526 Sales 3,018 n.a. Other current liabilities 116 96 Tax rate 34 % n.a. Market price per share – year end $ 19.80 $ 17.50 Number of shares outstanding 500 million 500 million a. Interest coverage ratio (Assume that year 1 EBIT was $1,297 and year 1 interest expense was $120.) Year 1 interest coverage ratio Year 2 interest coverage ratio b. Average collection period (Assume that the accounts receivable balance was $950 on December 31 of the previous year and that year 1 sales were 2,700.) Year 1 ACP Year 2 ACP c. Current ratio Year 1 current Ratio Year 2 Current Ratio d. Quick ratio Year 1 Quick Ratio Year 2 Quick Ratio

Managerial Accounting: The Cornerstone of Business Decision-Making

7th Edition

ISBN:9781337115773

Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Chapter15: Financial Statement Analysis

Section: Chapter Questions

Problem 56P: The following selected information is taken from the financial statements of Arnn Company for its...

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Use the information in the table below to calculate the following ratios for Windswept Woodworks for year 1 and year 2. (Round your answers to 2 decimal places.)

Windswept Woodworks, Inc.
Input Data
(millions of dollars)
		Year 2			Year 1
Accounts payable		496			434
Accounts receivable		1,340			880
Accumulated depreciation		6,806			6,682
Cash & equivalents		284			178
Common stock		1,244			1,170
Cost of goods sold		1,500			n.a.
Depreciation expense		?			n.a.
Common stock dividends paid		?			n.a.
Interest expense		140			n.a.
Inventory		1,074			1,076
Addition to retained earnings		602			n.a.
Long-term debt		872			786
Notes payable		230			380
Gross plant & equipment		10,260			10,000
Retained earnings		3,122			2,526
Sales		3,018			n.a.
Other current liabilities		116			96
Tax rate		34	%		n.a.
Market price per share – year end	$	19.80		$	17.50
Number of shares outstanding		500	million		500	million

a. Interest coverage ratio (Assume that year 1 EBIT was $1,297 and year 1 interest expense was $120.)

Year 1 interest coverage ratio

Year 2 interest coverage ratio

b. Average collection period (Assume that the accounts receivable balance was $950 on December 31 of the previous year and that year 1 sales were 2,700.)

Year 1 ACP

Year 2 ACP

c. Current ratio

Year 1 current Ratio

Year 2 Current Ratio

d. Quick ratio

Year 1 Quick Ratio

Year 2 Quick Ratio

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