a.
Cash and Cash Equivalents:
Cash is one of the most liquid assets which is a determinant of the liquidity position of any entity. Cash equivalents are short-term investments that can be converted into known amounts of cash without any significant risk of changes in value.
Requirement 1
To Identify:
The total amount of cash and cash equivalents for the fiscal years ended September 28, 2019, and September 29, 2018.
b.
Vertical Analysis:
In vertical analysis, every line item is represented as a percentage of a base amount which can be either total assets, total liabilities, total equities, etc.
Requirement 2
To compute:
Cash and cash equivalents as a percentage of total current assets, total current liabilities, total
c.
Horizontal Analysis:
In horizontal analysis, a single line item is represented and compared as a percentage change from one base year to the subsequent years.
Requirement 3
To compute:
Percentage change between the beginning and ending cash and cash equivalents for the fiscal years ended 2019 and 2018.
d.
Days’ sales uncollected:
This ratio defines how fast a company converts its receivable into known amounts of cash. The lesser the ratio is, the better it is for the company as it will prove that the company employs an efficient system of cash collection from customers.
Requirement 4
To compute:
The days’ sales uncollected for both the fiscal year ending 2019 and 2018.
e.
Changes in Days’ sales uncollected:
The changes in the ratio of days’ sales uncollected will greatly impact the liquidity problem of the entity. If it is reduced, the company is considered to be efficiently managing its cash collection mechanism or in case, it is increased, the otherwise will follow.
Requirement 5
Whether A’s receivables collection is showing a favorable or unfavorable change.
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Chapter 6 Solutions
FINANCIAL+MANAGERIAL ACCT CONNECT ACC
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