E12-21A. (Learning Objective 4: Computing five ratios) The financial statements of Smith News, Inc., include the following items:

Requirement 1. Compute the following ratios for the current year:

a. Current ratio

d. Inventory resident period

b. Acid-test ratio

e. Payable outstanding period

c. Receivable collection period

f. Cash conversion cycle

Transcribed Image Text:

Balance Sheet: Current Year Preceding Year Cash......... $ 26,000 $ 32,000 Short-term investments. 14,000 20,000 Net receivables.......... 50,000 73,000 Inventory. 94,000 76,000 Prepaid expenses.......................... 9,000 8,000 Total current assets.. 193,000 209,000 Total current liabilities..... 129,000 96,000 Income Statement: Sales revenue...... $490,000 Cost of goods sold....... 274,000