Armada Company has these comparative balance sheet data: ARMADA COMPANY
Balance Sheets
December 31,
2017 2016
Cash $ 40,000 $ 30,000
Accounts receivable (net) 65,000 60,000
Inventory 60,000 50,000
Plant assets (net) 185,000 180,000
$350,000 $320,000
Accounts payable $ 50,000 $ 60,000
Mortgage payable (15%, due in 15 years) 100,000 100,000
Common stock, $10 par 140,000 120,000
Retained earnings 60,000 40,000
$350,000 $320,000
Additional information for 2017:
1. Net income was $25,000.
2. Sales on account were $450,000. Sales returns and allowances amounted to $25,000.
3. Cost of goods sold was $275,000.
4. Net cash provided by operating activities was $49,000.
5. Capital expenditures were $23,000, and cash dividends were $18,000.
Instructions
Compute the following ratios at December 31, 2017.
(a) Current. (e) Days in inventory
(b) Accounts receivable turnover. (f) Free cash flow.
(c) Average collection period.
(d) Inventory turnover.