The comparative financial statements of Bita Company for 2023, 2022, and 2021 included the following selected data:

Required

1. Compute these ratios for 2023 and 2022, assuming that all sales are on account:

a. Current ratio (round to two decimal places)

b. Acid-test ratio (round to two decimal places)

c. Days’ sales in receivables (round to nearest full day)

d. Accounts receivable turnover (round to nearest full turn)

2. Write a brief memo explaining to Adrian Crane, owner of Bita Company, which ratio values showed improvement from 2022 to 2023 and which ratio values deteriorated. Discuss whether this trend is favourable or unfavourable for the company.

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Balance Sheet Current assets Cash Short-term investments Receivables, net Inventories Prepaid expenses Total current assets Total current liabilities Income Statement Sales revenue 2023 +A 80 280 760 1,680 120 $ 2,920 $ 1,920 $10,400 2022 (in thousands) 80 400 600 1,520 120 $ 2,720 $ 1,640 $ $10,000 2021 40 240 480 1,360 80 $ $2,200 $1,520 $7,600