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Workshop 5 Problems Student Q Search Sheet Data Review View OBOU Home Insert Page Layout Formulas , Calibri (Body) - 12 - A Paste B IU 112 x v fox E Wrap Text 2 ' A . A A General $ - % Insert Delete Format Format Merge & Center - ) Conditional Formet Formatting as Table Cell Styles Sort & : Filter _ K L M N O P Q R S 1 5.2 Ratio Analysis Points: 3 items @ 4 points = 12 points 3 Directions: Compute the following liquidity ratios based on the information provided below. 10 5 a) Inventory Turnover Sales $ 750.000 Cost of Goods Sald $ 473,000 Merchandise Inventory Beginning of year $ 40,000 End of Year $ 44,000 11 12 Merchandise Inventory Turnover 13 14 b) Working Capital & Current Ratio 15 June 30,2018 Current Assets are $650,000 16 June 30, 2018 Current Liabilities are $250,000 17 Issued long term note to the bank for $80,000 cash 18 Before the Transaction $ 400,000 After the Transaction $ 480,000 20 21 1 Working Capital 2 Current Ratio 23 Helpful Resources 25 Principles of Accouting 26 Page 285 304 28 Ratio Analysis Video 33 Problem 5.1 Problem 5.2 Problem 5.3 Problem 5.4 Problem 5.5 Problem 5.6 + Ready E - O + 100%

Answer 1

Answer :-

1. Merchandise Inventory Turnover = Cost of goods sold/ Average inventory

Merchandise Inventory Turnover = $473,000/(40,000+$44,000)/2

Merchandise Inventory turnover = 11.26

2. Current Ratio = Current Assets / Current Liabilities

Before Transaction = $650,000 / $250,000

Before Transaction = 2.6

After Transaction = $730,000/ $250,000

After Transaction = 2.92

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