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The financial statements of Rebecca's Natural Foods include the following items:
Compute the following ratios for the current year:
a) Working Capital
Total Current Assets `-` Total Current Liabilities
`-` =
b) Current Ratio
Total current assets `/` Total Current Liabilities
`/` =
c) Acid-test Ratio
Cash + Short Term Investment + Net Acct. Receivables `/` Total Current Liabilities
`/` =
d) Inventory Turnover
Cost of goods sold `/` Average merchandise inventory
`/` =
e) Days sales in inventory
365 days `/` Inventory turnover
`/` =
f) Accounts Receivable turnover ratio
Net credit sales `/` Average net accounts receivables
`/` =
g) Days sales in receivables
365 days `/` Accounts receivable turnover ratio
`/` =
h) Gross Profit Percentage
Gross profit `/` Net sales revenue
`/` =
Current Year | Preceding Year | |
---|---|---|
Balance Sheet | ||
Cash | $20,000 | $22,000 |
Short-term Investments | 16,000 | 26,132 |
Accounts Receivable | 30,000 | 56,000 |
Merchandise Inventory | 40,000 | 34,000 |
Prepaid Expenses | 11,000 | 10,000 |
Total Current Assets | 160,000 | 206,000 |
Total Current Liabilities | 129,000 | 90,000 |
Income Statement | ||
Net Credit Sales | 475,000 | |
Cost of Goods Sold | 365,000 |
Compute the following ratios for the current year:
a) Working Capital
Total Current Assets `-` Total Current Liabilities
`-` =
b) Current Ratio
Total current assets `/` Total Current Liabilities
`/` =
c) Acid-test Ratio
Cash + Short Term Investment + Net Acct. Receivables `/` Total Current Liabilities
`/` =
d) Inventory Turnover
Cost of goods sold `/` Average merchandise inventory
`/` =
e) Days sales in inventory
365 days `/` Inventory turnover
`/` =
f) Accounts Receivable turnover ratio
Net credit sales `/` Average net accounts receivables
`/` =
g) Days sales in receivables
365 days `/` Accounts receivable turnover ratio
`/` =
h) Gross Profit Percentage
Gross profit `/` Net sales revenue
`/` =
a) 160000 `-` 129000 = 31000; b) 160000`/`129000 = 1.2403100775194; c) 66000`/`129000 = 0.512; d) 365000`/`37000 = 9.86; e) 365`/`9.86 = 37.0; f) 475000`/`43000 = 11.0; g) 365`/`11.0 = 33 ; h) 110000`/`475000 = 23.2