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The assignment is about Harris Corporation and involves calculating various financial ratios such as acid-test ratio, inventory turnover, days' sale in receivables, book value per share of common stock, price-earnings ratio, rate of return on total assets, times-interest-earned ratio, and current ratio. The calculations involve using the given data such as net sales, cost of goods sold, gross profit, income from operations, interest expense, net income, cash, accounts receivable, inventory, prepaid expenses, total current assets, total long-term assets, total current liabilities, total long-term liabilities, common stock, and number of shares.

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Student name:

Course name:

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The following information relates to Harris Corporation.

Course name:

Instructor name:

Date submitted:

The following information relates to Harris Corporation.

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Account Current year Prior year

Net sales (all credit) $520,125 $499,500

Cost of goods sold $375,960 $353,600

Gross profit $144,165 $145,900

Income from operations $ 95,500 $ 79,900

Interest expense $ 23,500 $ 19,500

Net income $ 57,600 $ 51,600

Cash $ 30,600 $ 15,900

Accounts receivable, net $ 33,800 $ 23,200

Inventory $ 42,000 $ 30,300

Prepaid expenses $ 2,000 $ 1,500

Total current assets $ 108,400 $ 70,900

Total long-term assets $ 62,000 $ 38,000

Total current liabilities $ 46,000 $ 41,600

Total long-term liabilities $ 20,000 $ 22,700

Common stock, no par, 3,000 shares, value

$50/share $ 30,000 $ 30,000

a. What is the acid-test ratio for the current year?

Solution-

Acid-test ratio = (Current Assets â€“ Inventory â€“ Prepaid Expenses)/Current Liabilities

Acid-test ratio = ($108,400 - $42,000 - $2,000)/$46,000

Acid-test ratio = 1.40

b. What is the inventory turnover for the current year?

Solution-

Inventory turnover = Cost of goods sold/Average Inventory

Inventory turnover = $375,960 / [($42,000+$30,300)/2]

Inventory turnover = 10.40

c. What is daysâ€™ sale in receivables for the current year?

Solution-

Daysâ€™ sale in receivables = Average Accounts receivable *365 / Net credit sales

Daysâ€™ sale in receivables = {[($33,800+$23,200)/2]*365}/$520,125

Daysâ€™ sale in receivables = 20 days

d. What is the book value per share of common stock for the current year?

Solution-

Book value per share of common stock = (Total asset -Total liabilities) / Number of

shares

Book value per share of common stock = ($170,400-$66,000)/3,000

Net sales (all credit) $520,125 $499,500

Cost of goods sold $375,960 $353,600

Gross profit $144,165 $145,900

Income from operations $ 95,500 $ 79,900

Interest expense $ 23,500 $ 19,500

Net income $ 57,600 $ 51,600

Cash $ 30,600 $ 15,900

Accounts receivable, net $ 33,800 $ 23,200

Inventory $ 42,000 $ 30,300

Prepaid expenses $ 2,000 $ 1,500

Total current assets $ 108,400 $ 70,900

Total long-term assets $ 62,000 $ 38,000

Total current liabilities $ 46,000 $ 41,600

Total long-term liabilities $ 20,000 $ 22,700

Common stock, no par, 3,000 shares, value

$50/share $ 30,000 $ 30,000

a. What is the acid-test ratio for the current year?

Solution-

Acid-test ratio = (Current Assets â€“ Inventory â€“ Prepaid Expenses)/Current Liabilities

Acid-test ratio = ($108,400 - $42,000 - $2,000)/$46,000

Acid-test ratio = 1.40

b. What is the inventory turnover for the current year?

Solution-

Inventory turnover = Cost of goods sold/Average Inventory

Inventory turnover = $375,960 / [($42,000+$30,300)/2]

Inventory turnover = 10.40

c. What is daysâ€™ sale in receivables for the current year?

Solution-

Daysâ€™ sale in receivables = Average Accounts receivable *365 / Net credit sales

Daysâ€™ sale in receivables = {[($33,800+$23,200)/2]*365}/$520,125

Daysâ€™ sale in receivables = 20 days

d. What is the book value per share of common stock for the current year?

Solution-

Book value per share of common stock = (Total asset -Total liabilities) / Number of

shares

Book value per share of common stock = ($170,400-$66,000)/3,000

Book value per share of common stock = $34.80

Calculation-

Total Assets (Current Year) = Total current assets + Total long-term assets

Total Assets (Current Year) = $108,400 + $62,000

Total Assets (Current Year) = $170,400

Total liabilities (Current Year) = Total current liabilities + Total long-term liabilities

Total liabilities (Current Year) = $46,000+$20,000

Total liabilities (Current Year) = $66,000

e. What is the price-earnings ratio for the current year?

Solution-

Price-earnings ratio = Market Price / Earnings per share

Price-earnings ratio = $50/$19.20

Price-earnings ratio = 2.60

Calculation-

Earnings per share = Net income /Number of shares

Earnings per share = $57,600/3,000

Earnings per share = $19.20

f. What is the rate of return on total assets for the current year?

Solution-

Rate of return on total assets = Net Income/ Average Total Assets

Rate of return on total assets = $57,600 /($170,400+$108,900)/2

Rate of return on total assets = 41.25%

Calculation-

Total Assets (Current Year) = Total current assets + Total long-term assets

Total Assets (Current Year) = $108,400 + $62,000

Total Assets (Current Year) = $170,400

Total Assets (Previous Year) = Total current assets + Total long-term assets

Total Assets (Previous Year) = $70,900 +$38,000

Total Assets (Previous Year) = $108,900

Calculation-

Total Assets (Current Year) = Total current assets + Total long-term assets

Total Assets (Current Year) = $108,400 + $62,000

Total Assets (Current Year) = $170,400

Total liabilities (Current Year) = Total current liabilities + Total long-term liabilities

Total liabilities (Current Year) = $46,000+$20,000

Total liabilities (Current Year) = $66,000

e. What is the price-earnings ratio for the current year?

Solution-

Price-earnings ratio = Market Price / Earnings per share

Price-earnings ratio = $50/$19.20

Price-earnings ratio = 2.60

Calculation-

Earnings per share = Net income /Number of shares

Earnings per share = $57,600/3,000

Earnings per share = $19.20

f. What is the rate of return on total assets for the current year?

Solution-

Rate of return on total assets = Net Income/ Average Total Assets

Rate of return on total assets = $57,600 /($170,400+$108,900)/2

Rate of return on total assets = 41.25%

Calculation-

Total Assets (Current Year) = Total current assets + Total long-term assets

Total Assets (Current Year) = $108,400 + $62,000

Total Assets (Current Year) = $170,400

Total Assets (Previous Year) = Total current assets + Total long-term assets

Total Assets (Previous Year) = $70,900 +$38,000

Total Assets (Previous Year) = $108,900

g. What is the times-interest-earned ratio for the current year?

Solution-

Times-interest-earned ratio = (EBIT-Interest Expense)/ Interest Expense

Times-interest-earned ratio = $95,500/ $23,500

Times-interest-earned ratio = 4.06

h. What is the current ratio for the current year?

Solution-

Current ratio = Current Assets/ Current Liabilities

Current ratio = $108,400/ $46,000

Current ratio = 2.36

Solution-

Times-interest-earned ratio = (EBIT-Interest Expense)/ Interest Expense

Times-interest-earned ratio = $95,500/ $23,500

Times-interest-earned ratio = 4.06

h. What is the current ratio for the current year?

Solution-

Current ratio = Current Assets/ Current Liabilities

Current ratio = $108,400/ $46,000

Current ratio = 2.36

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