![E13-8 Computing and Interpreting Liquidity Ratios (LO 13-4, LO 13-5] Trim Corporation is the largest uniform supplier in Nort](http://img.homeworklib.com/questions/703da0f0-722f-11ea-ba5d-07661276a54d.png?x-oss-process=image/resize,w_560)
Homework Answers
1.
Current assets = Cash and cash equivalents + Accounts receivables + Inventories + Prepaid rent and other current assets
= 400 + 580 + 260 + 585
= $1,825 million
Current liabilities = Accounts payable + Salaries and wages payable + Notes payable + Other current liabilities
= 140 + 380 + 88 + 14
= $622 million
Current ratio = Current assets/Current liabilities
= 1,825/622
= 2.93
2.
Average inventory = (Beginning inventory + Ending inventory)/2
= (270 + 260)/2
= $265 million
Inventory turnover = Cost of goods sold/Average inventory
= 2,900/265
= 10.94 (rounded to two decimals)
3.
Average accounts receivable = (Beginning accounts receivable + Ending accounts receivable)/2
= (530 + 580)/2
= $555 million
Accounts receivable turnover = Net sales/Average accounts receivables
= 4,700/555
= 8.47
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