The following selected information is taken from the financial statements of Arnn Company for its most recent year of operations: Beginning balances: Inventory $200,000 Accounts receivable 300,000 Ending balances: Inventory 250,000 Accounts receivable 400,000 Cash 100,000 Marketable securities (short-term) 200,000 Prepaid expenses 50,000 Accounts payable 175,000 Taxes payable 85,000 Wages payable 90,000 Short-term loans payable 50,000 During the year, Arnn had net sales of $2.45 million. The cost of goods sold was $1.3 million. Required: When required, round your answers to two decimal places. Assume 365 days per year. 1. Compute the current ratio. fill in the blank 1 2. Compute the quick or acid-test ratio. fill in the blank 2 3. Compute the accounts receivable turnover ratio. fill in the blank 3 times 4. Compute the accounts receivable turnover in days. fill in the blank 4 days 5. Compute the inventory turnover ratio. fill in the blank 5 times 6. Compute the inventory turnover in days. fill in the blank 6 days
The following selected information is taken from the financial statements of Arnn Company for its most recent year of operations: Beginning balances: Inventory $200,000 Accounts receivable 300,000 Ending balances: Inventory 250,000 Accounts receivable 400,000 Cash 100,000 Marketable securities (short-term) 200,000 Prepaid expenses 50,000 Accounts payable 175,000 Taxes payable 85,000 Wages payable 90,000 Short-term loans payable 50,000 During the year, Arnn had net sales of $2.45 million. The cost of goods sold was $1.3 million. Required: When required, round your answers to two decimal places. Assume 365 days per year. 1. Compute the current ratio. fill in the blank 1 2. Compute the quick or acid-test ratio. fill in the blank 2 3. Compute the accounts receivable turnover ratio. fill in the blank 3 times 4. Compute the accounts receivable turnover in days. fill in the blank 4 days 5. Compute the inventory turnover ratio. fill in the blank 5 times 6. Compute the inventory turnover in days. fill in the blank 6 days
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Liquidity Analysis
The following selected information is taken from the financial statements of Arnn Company for its most recent year of operations:
| Beginning balances: | |
| Inventory | $200,000 |
| 300,000 | |
| Ending balances: | |
| Inventory | 250,000 |
| Accounts receivable | 400,000 |
| Cash | 100,000 |
| Marketable securities (short-term) | 200,000 |
| Prepaid expenses | 50,000 |
| Accounts payable | 175,000 |
| Taxes payable | 85,000 |
| Wages payable | 90,000 |
| Short-term loans payable | 50,000 |
During the year, Arnn had net sales of $2.45 million. The cost of goods sold was $1.3 million.
Required:
When required, round your answers to two decimal places. Assume 365 days per year.
1. Compute the current ratio.
fill in the blank 1
2. Compute the quick or acid-test ratio.
fill in the blank 2
3. Compute the accounts receivable turnover ratio.
fill in the blank 3 times
4. Compute the accounts receivable turnover in days.
fill in the blank 4 days
5. Compute the inventory turnover ratio.
fill in the blank 5 times
6. Compute the inventory turnover in days.
fill in the blank 6 days
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fill in the blank 4 days
5. Compute the inventory turnover ratio.
fill in the blank 5 times
6. Compute the inventory turnover in days.
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