Question

perating Asset Management Analysis Partial comparative balance sheet and income statement information for Posad Company is as follows: 2014 2013 Cash $ 13,600 $ 10,400 Marketable securities 7,200 17,200 Accounts receivable (net) 44,800 35,600 Inventory 54,400 49,600 Total current assets $120,000 $112,800 Accounts payable $ 40,000 $ 28,200 Net sales $322,560 $220,720 Cost of goods sold 217,600 203,360 Gross margin $104,960 $ 17,360 In 2012, the year-end balances for Accounts Receivable and Inventory were $32,400 and $51,200, respectively. Accounts Payable was $30,600 in 2012 and is the only current liability. Compute the current ratio, quick ratio, receivables turnover, days' sales uncollected, inventory turnover, days' inventory on hand, payables turnover, days' payable for each year, and financing period. Assume 365 days in a year. Round your answers to one decimal place. 2014 2013 Current ratio: times times Quick ratio: times times Receivables turnover: times times Days' sales uncollected: days days Inventory turnover: times times Days' inventory on hand: days days Payables turnover: times times Days' payable: days days Financing period days days

Answer 1

1	Current ratio = Current assets / current Liabilities
	Current assets	120000	112800
	Current liabilities	40000	28200
	Current ratio	3.0	4.0
2	Quick ratio = (current assets - inventory -prepaid expense )/ current liabilities
	Quick assets	65600	63200
	Current liabilities	40000	28200
	Acid test ratio	1.6	2.2
3	Receivable turnover = Net sales / Average accounts receivable
	Net sales	322560	220720
	Beginning accounts receivable	35600	32400
	Ending accounts receivable	44800	35600
	Average accounts receivable	40200	34000
	Average accounts receivable = (Beginning + ending )/2
	Receivable turnover	8.02	6.49
4	Days sales uncollected = 365 / accounts receivable tunover
	Days sales uncollected	45.49	56.23	Days
5	Inventory turnover = Cost of goods sold / Average inventory
	Cost of goods sold	217600	203360
	Beginning inventory	49600	51200
	Ending inventory	54400	49600
	Average inventory	52000	50400
	Average inventory = (Beginning + Ending )/2
	Inventory turnover	4.2	4.0
6	Days sale in inventory = 365 / inventory turnover
	Days sales in inventory	87.2	90.5	Days
7	Payable turnover = Cost of goods sold / Average accounts payable
	Cost of goods sold	217600	203360
	Beginning payable	28200	30600
	Ending payable	40000	28200
	Average Payable	34100	29400
	Average payable = (Beginning + Ending )/2
	Inventory Payable	6.4	6.9
8	Days payable turnover = 365 / inventory turnover
	Days payable turnover	57.2	52.8	Days