Chapter 9, Problem S9.13SE

Using the acid-test ratio, accounts receivable turnover ratio, and days’ sales in receivables to evaluate a company

Gold Clothiers reported the following selected items at September 30, 2016 (last year’s-2015-amounts also given as needed):

Accounts Payable	$ 331,000	Accounts Receivable, net:
Cash	302,900	September 30, 2016	$ 303,000
Merchandise Inventory:		September 30, 2015	152,000
September 30, 2016	230,000	Cost of Goods Sold	1,150,000
September 30, 2015	190,000	Short-term Investments	151,000
Net Credit Sales Revenue	3,321,500	Other Current Assets	70,000
Long-term Assets

Long-term Liabilities450,000

100,000Other Current Liabilities191,000

Compute Cold's (a) acid-tcst ratio, (b) accounts receivable turnover ratio, and (c) days’ sales in receivables for 2016. Evaluate each ratio value as strong or weak. Gold sells on terms of net 30. (Round days' sales in receivables to a whole number.)