Question

Instructions For 2017 and 2018, calculate current ratio, quick (acid-test) ratio, inventory turnover and days' inventory outstanding (DIO), accounts receivable turnover, days' sales in average receivables or days' sales outstanding (DSO), accounts payable turnover, days' payable outstanding (DPO), and cash conversion cycle (in days). a. Use the cost of goods sold in the formula for accounts payable turnover. b. Use a 365-day year for calculations as needed. c. Use cell references from prior calculations, if applicable. (Always use cell references and formulas where appropriate to receive full credit. If you copy/paste from the Instructions tab you will be marked wrong.) Total Points

Answer 1

Formulas:

Quick assets=Current assets-Inventory-Prepaid expences

Current ratio=Current assets/Current Liabilities

Quick ratio=Quick assets/Current Liabilities

Inventory Turnover ratio=COGS/Avg inventory

Avg inventory=(Opening inventory+closing inventory)/2

Days Inventory Outstanding=365/inventory turnover ratio

Average receivable=(Opening Rec+Closing Rec)/2

Account receivable turnover=Credit sales/Average receivable

Days sales outstanding=365/average receivable turnover

Average Account payable=(opening A.P.+Closing A.P.)/2

Account payable turnover=COGS/Avg account payable

Days payable outstanding=365/account payable turnover

Cash conversion cycle=Days inventory outstanding+dayssales outstanding-days payable outstanding

Particular	2017	2018
Current assets	283000	279000
Current Liabilities	97000	130000
Current Ratio	2.917526	2.146154
Quick assets	207000	176000
Quick ratio	2.134021	1.353846
COGS	278000	280000
Avg Inventory	64000	83000
Inventory turnover ratio	4.34375	3.373494
Days inventory outstanding	84.02878	108.1964
Average receivable	59500	82500
Credit sales	507000	493000
Account receivable turnover	8.521008	5.975758
Days sales outstanding	42.83531	61.08012
Average account payable	37500	40000
Account payable Turnover	7.413333	7
Days Payble outstanding	49.23561	52.14286
Cash conversion cycle	77.62847	117.1337

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