Q5. Shown below are selected financial data for Planet X, Inc. and Planet Y, Inc., at the end of the current year: Planet X, Planet Y, Inc. Inc. $ 700,000 $ 800,000 600,000 Net credit sales Cost of goods sold 550,000 Cash 80,000 30,000 Accounts receivable 85,000 80,000 (net) Inventory 60,000 150,000 Current liabilities 110,000 100,000 Instructions a. For each of the two companies, compute the following: 1. Current ratio 2. Quick ratio 3. Number of times inventory turned over during the year and the average number of days required to turn over inventory (round computation to the nearest day).
Q5. Shown below are selected financial data for Planet X, Inc. and Planet Y, Inc., at the end of the current year: Planet X, Planet Y, Inc. Inc. $ 700,000 $ 800,000 600,000 Net credit sales Cost of goods sold 550,000 Cash 80,000 30,000 Accounts receivable 85,000 80,000 (net) Inventory 60,000 150,000 Current liabilities 110,000 100,000 Instructions a. For each of the two companies, compute the following: 1. Current ratio 2. Quick ratio 3. Number of times inventory turned over during the year and the average number of days required to turn over inventory (round computation to the nearest day).
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text:Q5.
Shown below are selected financial data for Planet X, Inc. and Planet Y, Inc., at the end of the
current year:
Planet X,
Planet Y,
Inc.
Inc.
Net credit sales
$ 800,000
$ 700,000
Cost of goods sold
600,000
550,000
Cash
80,000
30,000
Accounts receivable
85,000
80,000
(net)
Inventory
60,000
150,000
Current liabilities
110,000
100,000
Instructions
a. For each of the two companies, compute the following:
1. Current ratio
2. Quick ratio
3. Number of times inventory turned over during the year and the average number of days required to
turn over inventory (round computation to the nearest day).
4. Number of times accounts receivable turned over during the year and the average number of days
required to collect accounts receivable (round computation to the nearest day).
b. From the viewpoint of a short-term creditor, comment on the quality of each company's operations.
To which company would you prefer to sell $40,000 in merchandise on a 30-day open account?
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