The Following Data Were Shown in the Records of Morgan

question 41

Essay

The following data were shown in the records of Morgan Company at the end of 20X2: $$\begin{array} { | l | r | } \hline \text { Quick assets } & \$ 180,000 \\\hline \text { Current assets } & 225,000 \\\hline \text { Average net receivables } & 10,000 \\\hline \text { Average inventory } & 42,000 \\\hline \text { Current liabilities } & 50,000 \\\hline \text { Net credit sales } & 120,000 \\\hline \text { Cost of goods sold } & 84,000 \\\hline \text { Assume a 365-day year } & \\\hline\end{array}$$ Compute the following ratios
a) Quick ratio:
(b) Current (working capital) ratio:
(c) Receivable turnover:
(d) Inventory turnover:
(e) Average age of receivables
(f) Average days' supply in inventory

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Definitions:

Treasury Stock

Shares that were first put into circulation by a company and then taken back, diminishing the quantity of shares actively traded on the market.

Small Stock Dividend

A dividend paid in the form of additional shares of the issuing corporation, typically representing less than a 25% increase of the outstanding shares.

Retained Earnings

The portion of net income that is retained by the corporation rather than distributed to its owners as dividends.

Additional Paid-In Capital

Additional paid-in capital is the amount of money that shareholders have paid for shares above the stated par value during issuance, representing excess funds contributed by shareholders.