P 6-11 A partial balance sheet and income statement for King Corporation follow:
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KING CORPORATION
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Partial Balance Sheet
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December 31, 2011
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Assets
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Current assets:
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Cash
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$ 33,493
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Marketable securities
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215,147
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Trade receivables, less allowance of $6,000
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255,000
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Inventories, LIFO
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523,000
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Prepaid expenses
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26,180
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Total current assets
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$1,052,820
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Liabilities
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Current liabilities:
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Trade accounts payable
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$ 103,689
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Notes payable (primarily to banks) and commercial paper
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210,381
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Accrued expenses and other liabilities
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120,602
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Income taxes payable
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3,120
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Current maturities of long-term debt
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22,050
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Total current liabilities
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$ 459,842
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KING CORPORATION
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Partial Income Statement
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For Year Ended December 31, 2011
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Net sales
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$3,050,600
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Miscellaneous income
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45,060
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$3,095,660
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Costs and expenses:
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Cost of sales
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$2,185,100
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Selling, general, and administrative expenses
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350,265
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Interest expense
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45,600
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Income taxes
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300,000
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2,880,965
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Net income
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$ 214,695
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Note: The trade receivables at December 31, 2010, were $280,000, net of an allowance of $8,000, for a gross receivables figure of $288,000. The inventory at December 31, 2010, was $565,000.
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Required Compute the following:
- a. Working capital
- b. Current ratio
- c. Acid-test ratio
- d. Cash ratio
- e. Days' sales in receivables
- f. Accounts receivable turnover in days
- g. Days' sales in inventory
- h. Inventory turnover in days
- i. Operating cycle