Use the financial data shown below to calculate the following ratios for the current year:
(a)Current ratio.
(b)Acid-test ratio.
(c)Accounts receivable turnover.
(d)Days' sales uncollected.
(e)Inventory turnover.
(f)Days' sales in inventory.
Income statement data Sales (all on credit)………………………………… $650,000
Cost of goods sold………………………………….425,000
Income before taxes……………………………….. 78,000
Net income………………………………………… 54,600
Definitions:
Percentage Completion
An accounting method used to recognize revenues and expenses of long-term projects proportionally to the work completed.
Future Costs
Expected or estimated costs that a company will incur in the future, which can impact financial planning and decision-making.
Conceptual Framework
A system of ideas and objectives that guide the development, preparation, and interpretation of financial reporting and accounting standards.
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