Quick ratio, current ratio, and accounts receivable turnover (Learning Objective 7) 15–20 min.

Cherokee Equipment reported the following items on December 31, 2014 (amounts in thousands, with last year’s amounts also given as needed):

$ 450 220 200 140 1,911 400 10 Accounts Payable........................

Cash............................................

Inventory:

December 31, 2014................

December 31, 2013................

Net Credit Sales ..........................

Long-term Assets .......................

Long-term Liabilities ...................

$ 250 170 1,100 168 60 130 Accounts Receivable, Net:

December 31, 2014................

December 31, 2013................

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

Short-term Investments..............

Other Current Assets...................

Other Current Liabilities ..............

Requirements 1. Compute Cherokee Equipment’s

(a) quick ratio,

(b) current ratio, and

(c) accounts receivable turnover for 2014.
2. Evaluate each ratio value as strong or weak. Assume Cherokee Equipment sells on terms of net 30.AppendixLO1