Using ratio data to evaluate a company’s financial position
The comparative financial statements of Lakeland Cosmetic Supply for 2012, 2011, and 2010 include the data shown here:
Requirements
1. Compute these ratios for 2012 and 2011:
a. Acid-test ratio
b. Days’ sales in receivables
c. Accounts receivable turnover
2. Considering each ratio individually, which ratios improved from 2011 to 2012 and which ratios deteriorated? Is the trend favorable or unfavorable for the company?
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