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ACCT 557 Week 7 2021

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BE24-9 Heartland Company’s budgeted sales and budgeted cost of goods sold for the coming year are $144,000,000 and $99,000,000, respectively. Short-term interest rates are expected to average 10%.... If Heartland can increase inventory turnover from its present level of 9 times a year to a level of 12 times per year, compute its expected cost savings for the coming year. Inventory Turnover = Cost of Goods Sold / Average Inventory $99,000,000 / Average Inventory = 9 Average inventory = $144,000,000 / 9 = $11,000,000 $99,000,000 / Average Inventory = 12 Average Inventory = $144,000,000 / 12 = $8,250,000 Cost savings = ($11,000,000 - 8,250,000) x 10% = $275,000 *E24-6 (Ratio Analysis) Howser Inc. is a manufacturer of electronic components and accessories with total assets of $20,000,000. Selected financial ratios for Howser and the industry averages for firms of similar size are presented below. 2013 Howser Industry (2011, 2012, 2013) Average Current ratio (2.09), (2.27), (2.51) 2.24 Quick ratio (1.15), (1.12), (1.19) 1.22 Inventory turnover (2.40), (2.18), (2.02) 3.50 Net sales to stockholders’ equity (2.75), (2.80), (2.95) 2.85 Net income to stockholders’ equity (0.14), (0.15), (0.17) 0.11 Total liabilities to stockholders’ equity (1.41), (1.37), (1.44) 0.95 *CA24-13 (Effect of Transactions on Financial Statements and Ratios) The transactions listed below relate to Wainwright Inc. You are to assume that on the date on which each of the transactions occurred, the corporation’s accounts showed only common stock ($100 par) outstanding, a current ratio of 2.7:1, and a substantial net income for the year to date (before giving effect to the transaction concerned). On that date, the book value per share of stock was $151.53. [Show More]

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