(L04) (Ratio Computations and Analysis) Prior Company’s condensed financial statements provide the following information.

Instructions

(a) Determine the following for 2017.
(1) Current ratio at December 31.
(2) Acid-test ratio at December 31.
(3) Accounts receivable turnover.
(4) Inventory turnover.
(5) Return on assets.
(6) Profit margin on sales.

(b) Prepare a brief evaluation of the financial condition of Prior Company and of the adequacy of its profits.

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Cash Accounts receivable (net) Short-term investments Inventory Prepaid expenses Total current assets Property, plant, and equipment (net) Total assets Current liabilities $ 773,000 857,000 $1,630,000 PRIOR COMPANY BALANCE SHEET Dec. 31, 2017 $ 52,000 198,000 80,000 440,000 Dec. 31, 2016 $ 60,000 80,000 40,000 360,000 7,000 $ 547,000 853,000 $1,400,000 3,000 240,000 160,000 Bonds payable 400,000 400,000 Common stockholders' equity 990,000 840,000 Total liabilities and stockholders' equity $1,630,000 $1,400,000