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Accounts Payable Cash Merchandise Inventory: July 31, 2024 July 31, 2023 Net Credit Sales Revenue Long-term Assets Long-term Liabilities $ 327,000 345,740 280,000 230,000 3,175,500 440,000 130,000 Accounts Receivable, net: July 31, 2024 July 31, 2023 Cost of Goods Sold Short-term Investments Other Current Assets Other Current Liabilities $ 232,000 116,000 1,160,000 147,000 110,000 187,000

Accounts Payable Cash Merchandise Inventory: July 31, 2024 July 31, 2023 Net Credit Sales Revenue Long-term Assets Long-term Liabilities $ 327,000 345,740 280,000 230,000 3,175,500 440,000 130,000 Accounts Receivable, net: July 31, 2024 July 31, 2023 Cost of Goods Sold Short-term Investments Other Current Assets Other Current Liabilities $ 232,000 116,000 1,160,000 147,000 110,000 187,000

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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**Northrend Clothiers: Financial Analysis Exercise** Northrend Clothiers reported the following selected items as of July 31, 2024 (last year's—2023—amounts also given as needed). **Analysis Task:** Compute Northrend's: - (a) Acid-test ratio - (b) Accounts receivable turnover ratio - (c) Days' sales in receivables for the year ending July 31, 2024. Evaluate each ratio value as strong or weak. Northrend sells on terms of net 30. Round the days' sales in receivables to a whole number. (Ignore leap years; use a 365-day year where needed.) --- **Computation Instructions:** (a) Compute Northrend’s acid-test ratio. Round your final answer to two decimal places. **Abbreviations used:** - Avg. = Average - Invest = Investment - Liab. = Liabilities - Merch. = Merchandise - Receiv. = Receivable - Rev. = Revenue **Formula Layout:** \( \text{Acid-test ratio} = \frac{(\text{Receivables}) + (\text{Investments}) + (\text{Cash equivalents})}{(\text{Liabilities})} \) Fill in the fields to calculate the acid-test ratio: \( \frac{[ \ \ \ \ ] + [ \ \ \ \ ] + [ \ \ \ \ ]}{[ \ \ \ \ ] + [ \ \ \ \ ] + [ \ \ \ \ ]} = [ \ \ \ \ ] \) \[ = \text{Acid-test ratio} \]
Transcribed Image Text:**Northrend Clothiers: Financial Analysis Exercise** Northrend Clothiers reported the following selected items as of July 31, 2024 (last year's—2023—amounts also given as needed). **Analysis Task:** Compute Northrend's: - (a) Acid-test ratio - (b) Accounts receivable turnover ratio - (c) Days' sales in receivables for the year ending July 31, 2024. Evaluate each ratio value as strong or weak. Northrend sells on terms of net 30. Round the days' sales in receivables to a whole number. (Ignore leap years; use a 365-day year where needed.) --- **Computation Instructions:** (a) Compute Northrend’s acid-test ratio. Round your final answer to two decimal places. **Abbreviations used:** - Avg. = Average - Invest = Investment - Liab. = Liabilities - Merch. = Merchandise - Receiv. = Receivable - Rev. = Revenue **Formula Layout:** \( \text{Acid-test ratio} = \frac{(\text{Receivables}) + (\text{Investments}) + (\text{Cash equivalents})}{(\text{Liabilities})} \) Fill in the fields to calculate the acid-test ratio: \( \frac{[ \ \ \ \ ] + [ \ \ \ \ ] + [ \ \ \ \ ]}{[ \ \ \ \ ] + [ \ \ \ \ ] + [ \ \ \ \ ]} = [ \ \ \ \ ] \) \[ = \text{Acid-test ratio} \]
**Financial Statement Overview** Below is a summary of various financial figures which may typically be found in a company's balance sheet and income statement. These figures provide insights into the company's financial position as of specific dates, which are essential for financial analysis and decision-making. 1. **Accounts Payable:** $327,000 - This represents the amount the company owes to its suppliers or creditors for goods and services received. 2. **Cash:** $345,740 - The total cash available to the company for its operations and investments. 3. **Merchandise Inventory:** - July 31, 2024: $280,000 - July 31, 2023: $230,000 - This indicates the value of the company's goods available for sale at two different fiscal year ends. 4. **Net Credit Sales Revenue:** $3,175,500 - The revenue generated from sales where payment is not received immediately. 5. **Long-term Assets:** $440,000 - These are assets the company expects to hold for more than one year, such as property, plant, and equipment. 6. **Long-term Liabilities:** $130,000 - Debts or obligations that are due beyond one year from the date of the financial statement. 7. **Accounts Receivable, net:** - July 31, 2024: $232,000 - July 31, 2023: $116,000 - The amounts owed to the company by its customers, less any allowances for doubtful accounts. 8. **Cost of Goods Sold (COGS):** $1,160,000 - The direct costs attributable to the production of the goods sold by the company. 9. **Short-term Investments:** $147,000 - Investments that are expected to be converted into cash within a year. 10. **Other Current Assets:** $110,000 - Additional assets expected to be converted to cash or used up within a year. 11. **Other Current Liabilities:** $187,000 - Other liabilities due within one year that do not fall into the categories listed above. These figures are crucial for assessing the financial health and operational efficiency of the company.
Transcribed Image Text:**Financial Statement Overview** Below is a summary of various financial figures which may typically be found in a company's balance sheet and income statement. These figures provide insights into the company's financial position as of specific dates, which are essential for financial analysis and decision-making. 1. **Accounts Payable:** $327,000 - This represents the amount the company owes to its suppliers or creditors for goods and services received. 2. **Cash:** $345,740 - The total cash available to the company for its operations and investments. 3. **Merchandise Inventory:** - July 31, 2024: $280,000 - July 31, 2023: $230,000 - This indicates the value of the company's goods available for sale at two different fiscal year ends. 4. **Net Credit Sales Revenue:** $3,175,500 - The revenue generated from sales where payment is not received immediately. 5. **Long-term Assets:** $440,000 - These are assets the company expects to hold for more than one year, such as property, plant, and equipment. 6. **Long-term Liabilities:** $130,000 - Debts or obligations that are due beyond one year from the date of the financial statement. 7. **Accounts Receivable, net:** - July 31, 2024: $232,000 - July 31, 2023: $116,000 - The amounts owed to the company by its customers, less any allowances for doubtful accounts. 8. **Cost of Goods Sold (COGS):** $1,160,000 - The direct costs attributable to the production of the goods sold by the company. 9. **Short-term Investments:** $147,000 - Investments that are expected to be converted into cash within a year. 10. **Other Current Assets:** $110,000 - Additional assets expected to be converted to cash or used up within a year. 11. **Other Current Liabilities:** $187,000 - Other liabilities due within one year that do not fall into the categories listed above. These figures are crucial for assessing the financial health and operational efficiency of the company.
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