The comparative financial statements of Sunset Pools Inc. for 2017, 2016, and 2015 included the following selected data:

Requirements

1. Compute these ratios for 2017 and 2016:

a. Current ratio

b. Acid-test ratio

c. Days' sales in receivables

2. Write a memo explaining to top management which ratio values improved from 2016 to 2017 and which ratio values deteriorated. State whether the overall trend is favourable or un-favourable, and give the reason for your evaluation.

3. Recommend two ways for Sunset Pools to improve cash flow from receivables?