A firm’s balance sheets for the last two years are as follows: YEAR 20X1 Assets Liabilities and Equity Cash $ 8,000 Accounts payable $ 15,000 Accruals 13,000 Accounts receivable 9,000 Current bank note 14,000 Inventory 20,000 Long-term debt 64,000 Plant and equipment 103,000 Common stock 15,000 Retained earnings 19,000
A firm’s balance sheets for the last two years are as follows: YEAR 20X1 Assets Liabilities and Equity Cash $ 8,000 Accounts payable $ 15,000 Accruals 13,000 Accounts receivable 9,000 Current bank note 14,000 Inventory 20,000 Long-term debt 64,000 Plant and equipment 103,000 Common stock 15,000 Retained earnings 19,000
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
A firm’s balance sheets for the last two years are as follows:
YEAR 20X1 | ||||||
Assets | Liabilities and Equity | |||||
Cash | $ | 8,000 | Accounts payable | $ | 15,000 | |
Accruals | 13,000 | |||||
9,000 | Current bank note | 14,000 | ||||
Inventory | 20,000 | Long-term debt | 64,000 | |||
Plant and equipment | 103,000 | Common stock | 15,000 | |||
19,000 | ||||||
$ | 140,000 | $ | 140,000 | |||
YEAR 20X2 | ||||||
Assets | Liabilities and Equity | |||||
Cash | $ | 4,000 | Accounts payable | $ | 10,000 | |
Accruals | 8,000 | |||||
Accounts receivable | 13,000 | Current bank note | 14,000 | |||
Inventory | 20,000 | Long-term debt | 71,000 | |||
Plant and equipment | 103,000 | Common stock | 17,000 | |||
Retained earnings | 20,000 | |||||
$ | 140,000 | $ | 140,000 | |||
Sales in 20X1 were $225,000. Sales in 20X2 were $225,000.
- Based solely on the
current ratio and the quick ratio, has the firm’s liquidity position deteriorated or improved? Round your answers to two decimal places.
Current ratios:
20x1:
20x2:
Quick ratios:
20x1:
20x2:
The firm’s liquidity position has .
- Without doing a calculation, has days sales outstanding (receivables turnover) improved?
Days sale outstanding has .
- Without doing a calculation, has inventory turnover deteriorated?
Inventory turnover has .
- If the firm earned $10,000 during 20X2, what proportion of those earnings were distributed? Round your answer to two decimal places.
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