Harold Limited's condensed financial statements provide the following information: 

Instructions 

a. Determine the following: 

1. Current ratio at December 31, 2020 

2. Acid-test ratio at December 31, 2020 

3. Accounts receivable turnover for 2020 

4. Inventory turnover for 2020 

5. Days payables outstanding for 2020 

6. Rate of return on assets for 2020 

7. Profit margin on sales 

b. Prepare a brief evaluation of the financial condition of Harold Limited and of the adequacy of its profits. 

c. In examining the other current liabilities on Harold Limited's SFP, you notice that unearned revenues have declined in the current year compared with the previous year. Is this a positive indicator about the client's liquidity? Explain.

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Harold Limited Statement of Financial Position Dec. 31, 2020 Dec. 31, 2019 Cash $ 52,000 $ 60,000 Accounts receivable (net) 198,000 80,000 FV-NI investments (short-term) 80,000 40,000 Inventory Prepaid expenses 440,000 360,000 3,000 7,000 Total current assets 773,000 547,000 Property, plant, and equipment (net) 857,000 853,000 $1,400,000 $ 145,000 Total assets $1,630,000 $ 220,000 Accounts payable Other current liabilities 20,000 15,000 Bonds payable 400,000 400,000 Common shareholders' equity 840,000 $1,400,000 990,000 Total liabilities and shareholders' equity $1,630,000 Income Statement For the Year Ended December 31, 2020 Sales $1,640,000 Cost of goods sold 800,000 Gross profit 840,000 Selling and administrative expenses $360,000 Interest expense 20,000 Income tax expense 100,000 480,000 Net income $ 360,000