The comparative financial statements of Welch Industries for 19X6, 19X5, and 19X4 included the following selected data:.

\section*{Required}
1. For 19X6 and 19X5 compute these ratios:

a. Current ratio

b. Acid-test ratio

c. Inventory turnover

d. Days' sales in average receivables 2. Explain for top management which ratio values showed improvement from 19X5 to 19X6 and which ratio values showed deterioration. Which item in the financial statements caused some ratio values to improve and others to deteriorate?

Transcribed Image Text:

Balance sheet: Current assets: Cash. Short-term investments. Receivables, net of allowance for doubtful accounts of $6, $6, and S5. Inventories...... Prepaid expenses.. Total current assets. Total current liabilities. Income statement: Sales revenue Cost of sales....... Millions 19X6 19X5 19X4 $ 59 $ 80 $ 60 131 174 122 237 265 218 389 341 302 61 27 46 877 887 748 483 528 413 $5,189 $4,995 $4,206 2,734 2,636 2,418