Question

LIIOIIVIT < 8 of 9 (1 complete) financial statements. The 2017 figures are given for comparison Data Table 3. (Rou g cash 8. How 2018 2017 Balance sheet-partial Current Assets: Cash Short-term Investments Accounts Receivable $ $ 13,500 10,000 $ 59,000 (8,000) 7,500 21,000 $ 51,000 195,000 3,000 72,000 (7,000) Less: Allowance for Bad Debts Merchandise Inventory Prepaid Insurance Total Current Assets Total Current Liabilities Income statement partial Not Sales (all on account) 65,000 191,000 3,000 282,500 105,000 277,500 103,000 661,200 735,000 Print Done Fields and the Clear All

Answer 1

Answer:

Acid Test Ratio = Quick Assets / Current Liabilities

2018 = ( 7500 + 21000 + 51000 ) / 103000 = 0.772

2017 = ( 13500 + 10000 + 65000 ) / 105000 = 0.843

Acid Test Ratio has deteriorated from 2017 to 2018

Compared to Industry they are less capable to handle Current Liabilities

Accounts Receivable Turnover Ratio = Sales / Avg.Accounts Receivable

2018 = 661200 / (51000 + 65000 ) /2 = 661200 / 58000 = 11.4

Compared to Industry company has better accounts receivable turnover

Days sales in receivables = 365 / 11.4 = 32.02 Days

Company's Receivables take 2 days extra to convert in cash.