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 dataSales (all on credit)………………………………… $650,000Cost of goods sold…………………………………. 425,000Income before taxes……………………………….. 78,000Net income………………………………………… 54,600?EndingBalancesBeginningBalancesCash$ 19,500$ 15,000Accounts receivable (net) 65,00060,000Inventory71,50064,500Plant and equipment (net)195,000183,900Total assets$351,000$323,400Current liabilities $ 62,400$ 52,700Long-term notes
payable97,500100,000
What will be an ideal response?
(a) Current ratio: ($19,500 + $65,000 + $71,500)/$62,400 = 2.5
(b) Acid-test ratio:($19,500 + $65,000)/$62,400 = 1.35
(c) Accounts receivable turnover: $650,000/[($65,000 + $60,000)/2] = 10.4 times
(d) Days' sales uncollected: ($65,000/$650,000) * 365 = 36.5 days
(e) Inventory turnover: $425,000/[($71,500 + $64,500)/2] = 6.25 times
(f) Days' sales in inventory: ($71,500/$425,000) * 365 = 61.4 days
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