Problem

(L.OBJ. 8 Evaluating ratio data [15—20 min] Abanaki Carpets reported the following amou...

(L.OBJ. 8 Evaluating ratio data [15—20 min]

Abanaki Carpets reported the following amounts in its 2011 financial statements. The 2010 figures are given for comparison.

Requirements

1. Calculate Abanaki’s acid-test ratio for 2011. Determine whether Abanaki’s acid-test ratio improved or deteriorated from 2010 to 2011. How does Abanaki’s acid-test ratio compare with the industry average of 0.80?

2. Calculate the days’ sales in receivables for 2011. How do the results compare with Abanaki’s credit terms of net 30?

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Solutions For Problems in Chapter 8

42CP
43PS

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