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: 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 compute: N Cosmetic Supply’s acid-test ratio for 2018 and 2017.

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Answer 1

Question

Chapter 8, Problem 8.34AP

(1)(a)

To determine

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:

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 compute: N Cosmetic Supply’s acid-test ratio for 2018 and 2017.

(1)(b)

To determine

To calculate: N Cosmetic Supply’s accounts receivable turnover ratio for 2018 and 2017.

(1)(c)

To determine

To calculate: N Cosmetic Supply’s days’ sales in receivables for 2018 and 2017.

(2)

To determine

To identify: Whether each ratio has been improved or deteriorated, and identify whether each ratio’s trend is favorable or unfavorable.

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Answer 2

Question

Chapter 8, Problem 8.34AP

(1)(a)

To determine

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:

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 compute: N Cosmetic Supply’s acid-test ratio for 2018 and 2017.

(1)(b)

To determine

To calculate: N Cosmetic Supply’s accounts receivable turnover ratio for 2018 and 2017.

(1)(c)

To determine

To calculate: N Cosmetic Supply’s days’ sales in receivables for 2018 and 2017.

(2)

To determine

To identify: Whether each ratio has been improved or deteriorated, and identify whether each ratio’s trend is favorable or unfavorable.

Expert Solution & Answer

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See solution

Answer 3

Question

Chapter 8, Problem 8.34AP

(1)(a)

To determine

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:

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 compute: N Cosmetic Supply’s acid-test ratio for 2018 and 2017.

(1)(b)

To determine

To calculate: N Cosmetic Supply’s accounts receivable turnover ratio for 2018 and 2017.

(1)(c)

To determine

To calculate: N Cosmetic Supply’s days’ sales in receivables for 2018 and 2017.

(2)

To determine

To identify: Whether each ratio has been improved or deteriorated, and identify whether each ratio’s trend is favorable or unfavorable.

Expert Solution & Answer

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Check out a sample textbook solution

See solution

Answer 4

Question

Chapter 8, Problem 8.34AP

(1)(a)

To determine

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:

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 compute: N Cosmetic Supply’s acid-test ratio for 2018 and 2017.

(1)(b)

To determine

To calculate: N Cosmetic Supply’s accounts receivable turnover ratio for 2018 and 2017.

(1)(c)

To determine

To calculate: N Cosmetic Supply’s days’ sales in receivables for 2018 and 2017.

(2)

To determine

To identify: Whether each ratio has been improved or deteriorated, and identify whether each ratio’s trend is favorable or unfavorable.

Expert Solution & Answer

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Check out a sample textbook solution

See solution

Answer 5

Chapter 8, Problem 8.34AP

(1)(a)

To determine

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:

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 compute: N Cosmetic Supply’s acid-test ratio for 2018 and 2017.

(1)(b)

To determine

To calculate: N Cosmetic Supply’s accounts receivable turnover ratio for 2018 and 2017.

(1)(c)

To determine

To calculate: N Cosmetic Supply’s days’ sales in receivables for 2018 and 2017.

(2)

To determine

To identify: Whether each ratio has been improved or deteriorated, and identify whether each ratio’s trend is favorable or unfavorable.

Answer 6

Chapter 8, Problem 8.34AP

(1)(a)

To determine

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:

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 compute: N Cosmetic Supply’s acid-test ratio for 2018 and 2017.

Answer 7

Chapter 8, Problem 8.34AP

(1)(a)

To determine

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:

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 compute: N Cosmetic Supply’s acid-test ratio for 2018 and 2017.

Answer 8

(1)(b)

To determine

To calculate: N Cosmetic Supply’s accounts receivable turnover ratio for 2018 and 2017.

Answer 9

(1)(b)

To determine

To calculate: N Cosmetic Supply’s accounts receivable turnover ratio for 2018 and 2017.

Answer 10

(1)(c)

To determine

To calculate: N Cosmetic Supply’s days’ sales in receivables for 2018 and 2017.

Answer 11

(1)(c)

To determine

To calculate: N Cosmetic Supply’s days’ sales in receivables for 2018 and 2017.

Answer 12

(2)

To determine

To identify: Whether each ratio has been improved or deteriorated, and identify whether each ratio’s trend is favorable or unfavorable.

Answer 13

(2)

To determine

To identify: Whether each ratio has been improved or deteriorated, and identify whether each ratio’s trend is favorable or unfavorable.

Answer 14

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Answer 15

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Answer 16

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Answer 17

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To calculate: N Cosmetic Supply’s accounts receivable turnover ratio for 2018 and 2017.

To calculate: N Cosmetic Supply’s days’ sales in receivables for 2018 and 2017.

To identify: Whether each ratio has been improved or deteriorated, and identify whether each ratio’s trend is favorable or unfavorable.

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Chapter 8 Solutions