Use the Financial Data Shown Below to Calculate the Following

question 229

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
$\begin{array}{|l|r|r|} \hline& \begin{array}{r}\text { Ending } \\\text { Balance }\end{array} & \begin{array}{r}\text { Beginning } \\\text { Balance }\end{array} \\\hline \text { Cash } & \$ 19,500 & \$ 15,000 \\\hline \text { Accounts receivable (net) } & 65,00 0 & 60,000 \\\hline \text { Inventory } & 71,500 & 64,500 \\\hline \text { Plant and equipment (net) } & 195,000 & 183,900 \\\hline \text { Total assets } & \$ 351,000 & \$ 323,400 \\\hline\end{array}$ $\begin{array}{|l|r|r|}\hline \text { Current liabilities } & \$ 62,400 & \$ 52,700 \\\hline \text { Long-term notes payable } & 97,500 & 100,00 \\\hline\end{array}$

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Definitions:

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