Trolls Incorporated had the following transactions involving current assets and current liabilities during February 2007.

Feb. 3 Collected accounts receivable of $15,000.

7 Purchased equipment for $20,000 cash.

11 Paid $3,000 for a 3-year insurance policy.

14 Paid accounts payable of $14,000.

18 Declared cash dividends, $6,000.

Additional information:

As of February 1, 2007, current assets were $100,000 and current liabilities were $40,000.

Instructions Compute the current ratio as of the beginning of the month and after each transaction.

60, Maury Company has these comparative balance sheet data:

MAURY COMPANY Balance Sheets December 31 _ 2007 _ _2 006_ Cash $ 25,000 $ 30,000 Receivables (net) 65,000 60,000 Inventories 60,000 50,000 Plant assets (net) _2 00,000 _1 80,000

$350,000 $320,000 Accounts payable $ 55,000 $ 60,000 Mortgage payable (15%) 100,000 100,000 Common stock, $10 par 135,000 120,000 Retained earnings 60,000 40,000

$350,000 $320,000 Additional information for 2007:

. Net income was $25,000.

. Sales on account were $400,000. Sales returns and allowances amounted to $25,000.

. Cost of goods sold was $198,000.

. Net cash provided by operating activities was $48,000.

n. ACbaBpiwtaWlN expenditures were $25,000, and cash dividends were $18,000.

Instructions Compute the following ratios at December 31, 2007.

(a) Current.

(e) Days in inventory.

(b) Receivables turnover.

(f) Cash debt coverage.

(c) Average collection period. (g) Current cash debt coverage.

(d) Inventory turnover. (h) Free cash flow.

Exercises 68 9