E5-30A. (Learning Objective 5: Using the current ratio and days’ sales in receivables to evaluate a company) Champi, Inc., reported the following items at December 31, 20X8 and 20X7:

Requirement 1. Compute Champi’s

(a) current ratio and

(b) days’ sales in average receivables for 20X8.
Evaluate each ratio value as strong or weak. Champi sells on terms of net 30 days.

Transcribed Image Text:

A1 123 Balance Sheets (Summarized) Year End 3 20X8 20X7 4 Current assets: 5 Cash $3,000 $9,000 6 Marketable securities 20,000 7 Accounts receivable, net 58,000 Current liabilities: Accounts payable 10,000 Other current liabilities 72,000 Long-term liabilities Year End 20X8 $ 18,000 $22,000 20X7 105,000 105,000 15,000 19,000 8 Inventory 90,000 88,000 9 Other current assets 2,000 2,000 Shareholders' equity 145,000 145,000 10 Long-term assets 110,000 110,000 11 Total assets $283,000 $291,000 Total liabilities and equity $283,000 $291,000 14 15 12 13 Income Statement (partial): Sales Revenue 20X8 $750,000