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(1)
Acid-test ratio:
The financial ratio which evaluates the ability of a company to pay all of its current liabilities, if they came due immediately is referred to as acid-test ratio.
Accounts receivable turnover is a liquidity measure of accounts receivable in times, which is calculated by dividing the net credit sales by the average amount of net accounts receivables. In simple, it indicates the number of times the average amount of net accounts receivables collected during a particular period.
Average collection period:
Average collection period indicates the number of days taken by a business, to collect its outstanding amount of accounts receivable on an average.
To calculate, analyze, and compare: A Carpets’ acid-test ratio for 2018 and 2017 with industry average ratio of 0.80.
(2)
To calculate and compare: A Carpets’ accounts receivable turnover ratio with the industry average accounts receivable turnover ratio of 10.
(3)
To calculate and compare: A Carpets’ days’ sales in receivables for 2018 with its credit terms of net 30.
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Chapter 8 Solutions
Horngren's Financial & Managerial Accounting, The Financial Chapters (6th Edition)
- Damerly Company (a Utah employer) wants to give a holiday bonus check of $375 to each employee. As it wants the check amount to be $375, it will need to gross-up the amount of the bonus. Calculate the withholding taxes and the gross amount of the bonus to be made to John Rolen if his cumulative earnings for the year are $46,910. Besides being subject to social security taxes and federal income tax (supplemental rate), a 4.95% Utah income tax must be withheld on supplemental payments.arrow_forwardPlease given correct answer general Accountingarrow_forwardHii ticher please given correct answer general Accountingarrow_forward
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