Franklin Ltd., a gift store, reported the following amounts in its 2023 financial statements. The 2022 figures

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Franklin Ltd., a gift store, reported the following amounts in its 2023 financial statements. The 2022 figures are given for comparison.image



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1. Determine whether Franklin Ltd.’s acid-test ratio improved or deteriorated from 2022 to 2023. How does Franklin Ltd.’s acid-test ratio compare with the industry average of 0.90?


2. Compare the days’ sales in receivables measure for 2023 with the company’s credit terms of net 30. What action, if any, should Franklin Ltd. take?


3. Indicate the most likely effect of the following changes in credit policy on the days’ sales in receivables (+ for increase, - for decrease, and NE for no effect):


a. Granted credit to people with poor credit history.


b. Increased collection techniques or methods.


c. Granted credit with discounts for early payment.

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Related Book For  book-img-for-question

Horngrens Accounting Volume 1

ISBN: 9780135359709

11th Canadian Edition

Authors: Tracie Miller Nobles, Brenda Mattison, Ella Mae Matsumura, Carol Meissner, JoAnn Johnston, Peter Norwood

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