Question

Application Problem 6-15B a, c (Part Level Submission) The following amounts were reported by Sindarius Ltd. in its most recent statement of financial position: 2020 2019 Cash and cash equivalents $33,480 $98,400 Accounts receivable (net) 273,420 205,000 Inventory 624,960 479,700 Prepaid expenses 16,740 16,400 Property, plant, and equipment (net) 1,165,200 1,225,700 Accounts payable 439,000 307,000 Wages payable 29,000 32,000 Income tax payable 24,000 19,000 Unearned revenue 66,000 52,000 Long-term bank loan payable 817,000 904,000 Common shares 200,000 200,000 Retained earnings 538,800 511,200 The company had sales of $1,886,598 in 2020 and $1,845,000 in 2019. All sales were on account. (a) Your answer is correct. Calculate the current ratio and quick ratio for Sindarius Ltd, for the current and preceding year. (Round ratios to 2 decimal places, e.g. 15.25.) Current ratio Quick ratio 1 2020 1.70 0.55 2019 1.95 0.74 Current ratio 1 Worsened Quick ratio Worsenede LINK TO TEXT Attempts: 2 of 2 used (c) Calculate Sindarius's accounts receivable turnover ratio and average collection period for the current and preceding years. For the accounts receivable turnover ratio, use the balance of accounts receivable at each year end for this calculation, rather than average balances. (Round accounts receivable turnover ratio to 2 decimal places, e.g. 15.25 and average collection period to 1 decimal place, e.g. 15.1. Use 365 days for calculation.) 2020 2019 Accounts receivable turnover ratio times times Average collection period days days Comment on whether these ratios have improved or worsened. Accounts receivable turnover ratio Average collection period

Answer 1

Requirement: A 7 7 Current ratio Denominator Current liabilities 558000 410000 = = Numerator Current assets 948600 799500 Current ratio Current ratio 1.70 to1 1.95 to1 2020 2019 T = / 1. Quick Ratio Denominator Current liabilities 558000 410000 Numerator Quick assets 306900 303400 = = Quick Ratio Quick Ratio 0.55 to1 0.74 to1 2020 2019 Current Ratio Quick Ratio Worsened Worsened

Requirement: C Year Accounts Recievable Turn over ratio Denominator Net Account Recievable 273420 205000 Numerator Net sales 1886598 1845000 = = Accounts Recievable Turn over ratio Accounts Recievable Turn over ratio 6.90 times 9.00 times 2020 2019 Year Numerator 365 Average collection period Denominator Recievable turn ove ratio 6.9 9.0 = Average collection period Average collection period 52.9 days 40.6 days 2020 365 365 Accounts Receivable Ratio Average collection period Worsened Worsened