The comparative financial statements of Appleway Flowers, Inc., for 2018, 2017, and 2016 include the following selected data:

Requirements

1. Compute these ratios for 2018 and 2017:

a. Quick ratio

b. Current ratio

c. Accounts receivable turnover (assume all sales are credit sales)

d. Receivable collection period (use 365 days)

2. Write a memo explaining to the company owner which ratios improved from 2017 to 2018, which ratios deteriorated, and which items in the financial statements changed and caused changes in some ratios. Discuss whether this change conveys a favorable or an unfavorable impression about the company.

Transcribed Image Text:

2018 2017 2016 Balance Sheet Current Assets: $ 18,500 $ 10,300 $ 5,500 Cash Short-term Investments 11,600 12,400 23,300 Receivables, Net 24,900 29,700 31,400 42,500 43,300 30,600 Inventory Prepaid Expenses 3,600 94,400 2,600 3,200 100,100 Total Current Assets 98,900 $ 65,700 $ 67,300 $ 62,600 Total Current Liabilities Income Statement $483,700 $471,900 $ 468,800 261,300 Sales Revenue Cost of Goods Sold 278,100 267,400