1
Introduction: Percentage representation of cash in terms of current assets and total assets is used to identify the immediate availability of liquidity in the organization. The percentage representation of cash in terms of current liabilities is to identify the immediate pay off of liabilities available in the organization.
To Determine: Percentage that cash represents of current assets, total assets, current liabilities and shareholder equity for each year
1
Answer to Problem 9BTN
Particulars | Current Year | Prior Year |
Cash that represents current assets | 14.6% | 14.7% |
Cash that represents total assets | 7.3% | 7.6% |
Cash that represents current Liabilities | 32.4% | 31.7% |
Cash that represents Shareholders’ Equity | 10.0% | 10.8% |
Explanation of Solution
Computation of percentage that cash represents of current assets, total assets, current liability and shareholders’ equity.
a. Cash that represents current assets =
b. Cash that represents total assets =
c. Cash that represents current liabilities =
d. Cash that represents Shareholders Equity =
Particulars | Current Year | Prior Year |
Cash | ₩16,840,766 | ₩16,284,780 |
Current Assets | ₩115,146,026 | ₩110,760,271 |
Cash that represents current assets |
|
|
Answer | 14.6% | 14.7% |
Total Assets | ₩230,422,958 | ₩214,075,018 |
Cash that represents total assets |
|
|
Answer | 7.3% | 7.6% |
Current Liabilities | ₩52,013,913 | ₩51,315,409 |
Cash that represents current Liabilities |
|
|
Answer | 32.4% | 31.7% |
Shareholders’ Equity | ₩168,088,188 | ₩150,016,010 |
Cash that represents Shareholders’ Equity |
|
|
Answer | 10.0% | 10.8% |
Comment on the trend of the percentage
From the above table, the conclusion can be drawn that there is no major change in the percentage that represents the current assets, total assets, current liabilities and shareholders’ Equity.
2
Introduction: To identify the difference between the cash balance of current and prior year, whether there has been an increase or decrease in the cash balance the percentage is calculated taking the prior year as the base.
To Determine:Percentage change in current and prior year cash balances
2
Answer to Problem 9BTN
Therefore, percentage change in cash balance is 3.4%.
Explanation of Solution
Percentage change in current and prior year cash balances Difference in cash Balance of current and previous year =₩16,840,766-₩16,284,780
= ₩555,986
Percentage change in cash balance =
= 3.4%
3
Introduction: Days of Sales uncollected is calculated to identify the time by
To Determine: Days Sales uncollected at the end of both the current and the prior year.
3
Answer to Problem 9BTN
Days Sales uncollected for current year is 50 days.
Days Sales uncollected of Prior year is 45 days, approx.
Explanation of Solution
Days Sales uncollected at the end of both the current and the prior year.
Days Sales uncollected is calculated by using formula =
Days Sales uncollected for current year =
= 50 days
Days Sales uncollected of Prior year =
= 44.5 days
The day’s sales uncollected has increased by 5.5 days approximately. There has been an increase in accounts receivable but net sales have declined from the previous year. So there has been no improvement in the number of days’ sales uncollected.
Want to see more full solutions like this?
Chapter 6 Solutions
Financial Accounting: Information for Decisions
- The following data (in millions) are taken from recent financial statements of Nike Inc.: a. Determine the amount of change (in millions) and percent of change in net income for Year 2. Round to one decimal place. b. Determine the percentage relationship between net income and net sales (net income divided by net sales) for Year 2 and Year 1. Round to one decimal place. c. What conclusions can you draw from your analysis?arrow_forwardSmoltz Company reported the following information for the current year: cost of goods sold, $252,500; increase in inventory, $21,700; and increase in accounts payable, $12,200. What is the amount of cash paid to suppliers that Smoltz would report on its statement of cash flows under the direct method? a. $218,600 c. $262,000 b. $243,000 d. $286,400arrow_forwardFinancial Statement Analysis The financial statements for Nike, Inc., are presented in Appendix C at the end of the text. The following additional information (in thousands) is available: Instructions 1. Determine the following measures for the fiscal years ended May 31, 2013 (fiscal 2012), and May 31, 2012 (fiscal 2011), rounding to one decimal place. a. Working capital b. Current ratio c. Quick ratio d. Accounts receivable turnover e. Number of days sales in receivables f. Inventory turnover g. Number of days sales in inventory h. Ratio of liabilities to stockholders equity i. Ratio of sales to assets j. Rate earned on total assets, assuming interest expense is 23 million for the year ending May 31, 2013, and 31 million for the year ending May 31, 2012 k. Rate earned on common stockholders equity l. Price-earnings ratio, assuming that the market price was 61.66 per share on May 31, 2013, and 53.10 per share on May 31, 2012 m. Percentage relationship of net income to sales 2. What conclusions can be drawn from these analyses?arrow_forward
- Use the following excerpts from Jasper Companys financial statements to determine cash paid to suppliers for inventory in 2018.arrow_forwardUse the following excerpts from Huckleberry Companys financial statements to determine cash paid to suppliers for inventory in 2018.arrow_forwardFinancial data for Otto Company follow: a. Compute the ratio of cash to monthly cash expenses. b. Interpret the results computed in (a).arrow_forward
- The following selected information is taken from the financial statements of Arnn Company for its most recent year of operations: During the year, Arnn had net sales of 2.45 million. The cost of goods sold was 1.3 million. Required: Note: Round all answers to two decimal places. 1. Compute the current ratio. 2. Compute the quick or acid-test ratio. 3. Compute the accounts receivable turnover ratio. 4. Compute the accounts receivable turnover in days. 5. Compute the inventory turnover ratio. 6. Compute the inventory turnover in days.arrow_forwardFinancial statement analysis The financial statements for Nike, Inc., are presented in Appendix D at the end of the text. Use the following additional information (in thousands): Instructions 1. Determine the following measures for the fiscal years ended May 31, 2016, and May 31, 2015. Round ratios and percentages to one decimal place. a. Working capital b. Current ratio c. Quick ratio d. Accounts receivable turnover e. Number of days sales in receivables f. Inventory turnover g. Number of days sales in inventory h. Ratio of liabilities to stockholders equity i. Asset turnover j. Return on total assets. k. Return on common stockholders equity l. Price-earnings ratio, assuming that the market price was 54.90 per share on May 29, 2016, and 52.81 per share on May 30, 2015 m. Percentage relationship of net income to sales 2. What conclusions can be drawn from these analyses?arrow_forward
- Financial AccountingAccountingISBN:9781305088436Author:Carl Warren, Jim Reeve, Jonathan DuchacPublisher:Cengage LearningFinancial AccountingAccountingISBN:9781337272124Author:Carl Warren, James M. Reeve, Jonathan DuchacPublisher:Cengage LearningManagerial Accounting: The Cornerstone of Busines...AccountingISBN:9781337115773Author:Maryanne M. Mowen, Don R. Hansen, Dan L. HeitgerPublisher:Cengage Learning
- Managerial AccountingAccountingISBN:9781337912020Author:Carl Warren, Ph.d. Cma William B. TaylerPublisher:South-Western College PubFinancial And Managerial AccountingAccountingISBN:9781337902663Author:WARREN, Carl S.Publisher:Cengage Learning,