Q5. Shown below are selected financial data for Planet X, Inc. and Planet Y, Inc., at the end of the current year: | Planet X, Inc. | Planet Y, Inc. S S00,000 600,000 80,000 Net credit sales Cost of goods sold Cash Accounts receivable (net) | 85,000 Inventory Current liabilities $ 700,000 550,000 | 30,000 80,000 150,000 100,000 60,000 110,000 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 tum 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, Inc. | Planet Y, Inc. S S00,000 600,000 80,000 Net credit sales Cost of goods sold Cash Accounts receivable (net) | 85,000 Inventory Current liabilities $ 700,000 550,000 | 30,000 80,000 150,000 100,000 60,000 110,000 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 tum 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
Related questions
Question
![Q5.
Shown below are selected financial data for Planet X, Inc. and Planet Y, Inc., at the end of the
current year:
Planet X, Inc. Planet Y, Inc.
$ 700,000
550,000
30,000
80.000
150,000
100,000
Net credit sales
Cost of goods sold
Cash
$ 800,000
600,000
80,000
Accounts receivable (net) 85,000
60,000
110,000
Inventory
Current liabilities
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
tum 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-tem 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?](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F00c65bd1-b740-46bd-a670-b6278e5d4771%2Fc91c2e18-7c5f-4cb6-853b-3a03fee348e4%2Fwi7mws9_processed.png&w=3840&q=75)
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, Inc. Planet Y, Inc.
$ 700,000
550,000
30,000
80.000
150,000
100,000
Net credit sales
Cost of goods sold
Cash
$ 800,000
600,000
80,000
Accounts receivable (net) 85,000
60,000
110,000
Inventory
Current liabilities
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
tum 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-tem 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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