E5-46B. (Learning Objective 5: Using the current ratio and days’ sales in receivables to evaluate a company) Navajo, Inc., reported the following items at December 31, 20X8 and 20X7:

Requirement 1. Compute Navajo’s

(a) current ratio and

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

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A1 1234567890122 Balance Sheets (Summarized) Year End Year End 20X8 20X7 20X8 20X7 4 Current assets: Cash $ 4,000 $10,000 Marketable securities 24,000 13,000 Accounts receivable, net 58,000 Current liabilities: Accounts payable Other current liabilities 75,000 Long-term liabilities $ 17,000 $18,000 106,000 109,000 15,000 19,000 Inventory 92,000 88,000 Other current assets 6,000 6,000 Stockholders' equity 146,000 146,500 10 Long-term assets 11 Total assets 13 Income Statement (partial): 14 15 Sales Revenue 100,000 100,000 $284,000 $292,000 Total liabilities and equity $284,000 $292,000 20X8 $730,000