Corsig Corporation Had the Following Comparative Current Assets and Current

question 158

Essay

Corsig Corporation had the following comparative current assets and current liabilities: $\begin{array}{lrr}&\text { Dec. } 31,2014&\text { Dec. } 31,2013\\\text { Current assets } & & \\\text { Cash } & \$ 25,000 & \$ 30,000 \\\text { Debt investments } & 40,000 & 10,000 \\\text { Accounts receivable } & 60,000 & 90,000 \\\text { Inventory } & 110,000 & 90,000 \\\text { Prepaid expenses } & 35,000 & 25,000 \\\quad \text { Total current assets } & \$ 270,000 & \$ 245,000 \\\text { Current liabilities }\\\text { Accounts payable } & \$ 120,000 & \$ 110,000 \\\text { Salaries and wages payable } & 40,000 & 30,000 \\\text { Income tax payable } & 10,000 & 15,000 \\\quad \text { Total current liabilities } & \$ 170,000 & \$ 155,000\end{array}$ During 2014, net credit sales and cost of goods sold were $570,000 and $350,000, respectively. Net cash provided by operating activities for 2014 was $140,000.
Instructions
Compute the following liquidity measures for 2014:
1. Current ratio
2. Current cash debt coverage
3. Accounts receivable turnover
4. Inventory turnover

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Definitions:

Income Statement

A financial statement that shows a company's revenues, expenses, and net income over a specific period.

Retail Company

A business entity that sells goods or commodities directly to consumers through various channels of distribution to earn a profit.

Credit Sales

Sales made on terms that allow the buyer to make payments at a later date, affecting the seller's accounts receivable.

Retained Earnings

The portion of net earnings not paid out as dividends but instead retained by the company to be reinvested in its core business or to pay debt.