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 . To compute: B Cosmetic Supply’s acid-test ratio for 2016 and 2015.

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Answer 1

Question

Chapter 8, Problem 8.40BP

(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.

To compute: B Cosmetic Supply’s acid-test ratio for 2016 and 2015.

(1)(b)

To determine

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.

To calculate: B Cosmetic Supply’s accounts receivable turnover ratio for 2016 and 2015.

(1)(c)

To determine

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: B Cosmetic Supply’s days’ sales in receivables for 2016 and 2015.

(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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Part A Unique Schools Supplies & Uniforms (USSU) designs and manufactures knapsack bags for students. After production, the bags are placed into individual cases, before being transferred into Finished Goods. The accounting records of the business reflect the following data at June 30, 2024, for the manufacturing of bags for Debe High School. Inventory Raw Materials 1/7/2023 30/6/2024 $230,000 $260,000 Work in Progress $348,300 $203,300 Finished Goods $632,900 $485,000 Other information: Sales Revenue Factory Supplies Used Direct Factory Labor Raw Materials Purchased Plant janitorial service Depreciation: Plant & Equipment $5,731,000 75,000 792,000 560,000 37,000 186,000 Total Utilities 481,250 Production Supervisor's Salary 450,000 School Logo (for bags) Design Costs 26,000 Packaging Cases Cost 42,000 Total Insurance 168,000 Delivery Vehicle Drivers' Wages 181,500 Depreciation: Delivery Vehicle 53,290 Property Taxes 240,000 Administrative Wages & Salaries 801,250 1% of Sales Revenue…

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Answer 2

Question

Chapter 8, Problem 8.40BP

(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.

To compute: B Cosmetic Supply’s acid-test ratio for 2016 and 2015.

(1)(b)

To determine

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.

To calculate: B Cosmetic Supply’s accounts receivable turnover ratio for 2016 and 2015.

(1)(c)

To determine

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: B Cosmetic Supply’s days’ sales in receivables for 2016 and 2015.

(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

Want to see the full answer?

Check out a sample textbook solution

See solution

Answer 3

Question

Chapter 8, Problem 8.40BP

(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.

To compute: B Cosmetic Supply’s acid-test ratio for 2016 and 2015.

(1)(b)

To determine

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.

To calculate: B Cosmetic Supply’s accounts receivable turnover ratio for 2016 and 2015.

(1)(c)

To determine

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: B Cosmetic Supply’s days’ sales in receivables for 2016 and 2015.

(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

Want to see the full answer?

Check out a sample textbook solution

See solution

Answer 4

Question

Chapter 8, Problem 8.40BP

(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.

To compute: B Cosmetic Supply’s acid-test ratio for 2016 and 2015.

(1)(b)

To determine

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.

To calculate: B Cosmetic Supply’s accounts receivable turnover ratio for 2016 and 2015.

(1)(c)

To determine

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: B Cosmetic Supply’s days’ sales in receivables for 2016 and 2015.

(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

Want to see the full answer?

Check out a sample textbook solution

See solution

Answer 5

Chapter 8, Problem 8.40BP

(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.

To compute: B Cosmetic Supply’s acid-test ratio for 2016 and 2015.

(1)(b)

To determine

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.

To calculate: B Cosmetic Supply’s accounts receivable turnover ratio for 2016 and 2015.

(1)(c)

To determine

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: B Cosmetic Supply’s days’ sales in receivables for 2016 and 2015.

(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 8.40BP

(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.

To compute: B Cosmetic Supply’s acid-test ratio for 2016 and 2015.

Answer 7

Chapter 8, Problem 8.40BP

(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.

To compute: B Cosmetic Supply’s acid-test ratio for 2016 and 2015.

Answer 8

(1)(b)

To determine

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.

To calculate: B Cosmetic Supply’s accounts receivable turnover ratio for 2016 and 2015.

Answer 9

(1)(b)

To determine

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.

To calculate: B Cosmetic Supply’s accounts receivable turnover ratio for 2016 and 2015.

Answer 10

(1)(c)

To determine

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: B Cosmetic Supply’s days’ sales in receivables for 2016 and 2015.

Answer 11

(1)(c)

To determine

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: B Cosmetic Supply’s days’ sales in receivables for 2016 and 2015.

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

Expert Solution & Answer

Answer 15

Expert Solution & Answer

Answer 16

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Answer 17

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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 . To compute: B Cosmetic Supply’s acid-test ratio for 2016 and 2015.

Solution Summary: The author calculates B Cosmetic Supply's acid-test ratio for 2016 and 2015 by dividing the net credit sales by the average amount of net accounts receivables.

Videos

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.

To compute: B Cosmetic Supply’s acid-test ratio for 2016 and 2015.

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: B Cosmetic Supply’s days’ sales in receivables for 2016 and 2015.

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

Want to see the full answer?

Chapter 8 Solutions

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 . To compute: B Cosmetic Supply’s acid-test ratio for 2016 and 2015.

Solution Summary: The author calculates B Cosmetic Supply's acid-test ratio for 2016 and 2015 by dividing the net credit sales by the average amount of net accounts receivables.

Videos

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. To compute: B Cosmetic Supply’s acid-test ratio for 2016 and 2015.

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: B Cosmetic Supply’s days’ sales in receivables for 2016 and 2015.

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

Want to see the full answer?

Chapter 8 Solutions

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.

To compute: B Cosmetic Supply’s acid-test ratio for 2016 and 2015.

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: B Cosmetic Supply’s days’ sales in receivables for 2016 and 2015.