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5. The balance sheet for the Novi Corporation is shown below. Sales for the year were $3,040,000, with 75 percent of sales so
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Answer #1
(a) Current ratio:-
a. Current Assets
Cash+Accounts Receivable+Inventory 50000+280000+240000 $             570,000
b. Current Liabilities
Accounts Payable+ Accrued Taxes 220000+80000 $             300,000
Ratio (a/b) 1.90 times
(b) Quick Ratio:-
a. Quick Assets (Cash+Accounts Receivable) 50000+280000 $             330,000
b. Current Liabilities $             300,000
Ratio (a/b) 1.10 times
(c) Debt to total assets ratio:-
a. Total Liabilities 220000+80000+118000 $        418,000
b Total Assets $        950,000
Ratio (a/b) 2.27 times
(d) Assets Turnover:-
a. Net Sales $          3,040,000
b. Total assets $             950,000
Ratio (a/b) 3.20 times
(e) Average collection period:-
a. Net Credit Sales 3040000*75% $     2,280,000
b. Accounts Receivable $        280,000
c Number of Days in year 365
Ratio ((b/a) *c) 44.82 days

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