West Highland Clothiers reported the following items at August 31, 2012 (amounts in thousands, with last years2011amounts also given as needed): Requirement 1. Compute West

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West Highland Clothiers reported the following items at August 31, 2012 (amounts in thousands, with last year’s—2011—amounts also given as needed):

Requirement
1. Compute West Highland’s (a) acid-test ratio and (b) days’ sales in average receivables for 2012. Evaluate each ratio value as strong or weak. West Highland sells on terms of net 30.

Accounts payable Cash 250 $ 380 Accounts receivable, net: August 31, 2012 $ 220 Inventories August 31, 2011 110 August 31, 2012 260 Cost of goods sold 1,160 August 31, 2011 220 Short-term investments 170 Net sales revenue 2,555 Other current assets 50 Long-term assets 360 Other current liabilities 160 -term liabilities 80