Current ratio, quick ratio, inventory turnover, accounts receivable turnover, and days’ sales in accounts receivable (Learning Objective 2)

15–20 min.

The financial statements of Oxford, Inc., include the following items:

Balance Sheet Cash.................................................................................

Short-Term Investments ..................................................

Accounts Receivable, Net.................................................

Inventory..........................................................................

Prepaid Expenses.............................................................

Total Current Assets.........................................................

Accounts Payable.............................................................

Total Current Liabilities ....................................................

Income Statement Net Sales ..........................................................................

Cost of Goods Sold ..........................................................

Net Income.......................................................................

$ 28,000 20,000 64,000 77,000 6,000 195,000 54,000 118,000

$488,000 293,000 61,000 Current Year

$ 36,000 28,000 70,000 55,000 8,000 197,000 48,000 92,000 Previous Year Requirement 1. Compute the following ratios for the current year:

(a) current ratio,

(b) quick ratio,

(c) cash conversion cycle,

(d) accounts receivable turnover,

(e) inventory turnover,

(f) gross profit percentage, and (g) net income percentage. Round all calculations to two decimal places, days to full days, and percentages to the nearest tenth of a percent. Assume all sales on credit.

AppendixLO1