Use the Financial Data Shown Below to Calculate the Following

question 36

Essay

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
$$\begin{array} { | l | l | l | } \hline & \begin{array} { l } \text { Ending } \\\text { Balances }\end{array} & \begin{array} { l } \text { Beginning } \\\text { Balances }\end{array} \\\hline \text { Cash } & \$ 19,500 & \$ 15,000 \\\hline \text { Accounts receivable (net) } & 65,000 & 60,000 \\\hline \text { Inventory } & 71,500 & 64,500 \\\hline \text { Plant and equipment (net) } & 195,000 & 183,900 \\\hline \text { Total assets } & \underline{\$ 351,000} &\underline{ \$ 323,400 }\\\hline \text { Current liabilities } & \$ 62,400 & \$ 52,700 \\\hline \text { Long-term notes payable } & 97,500 & 100,000 \\\hline\end{array}$$

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Definitions:

All Mining Rights

The comprehensive legal permissions granted to an individual or organization to explore for and extract minerals from a specific area.

Exclusive Use Areas

Sections of property designated for the private use of an individual or group, limiting access to others.

Condominium Law

The branch of law dealing with the creation, operation, and management of condominiums, including ownership and governance issues.

Dominant Tenement

A parcel of land to which a right-of-way or easement attaches for its better use.