Calculate ratios (Learning Objective 4)

The financial statements of Nature’s Health Foods include the following items:

Requirements Compute the following ratios for the current year:

a. Current ratio

b. Acid-test ratio

c. Inventory turnover

d. Days’ sales in average receivables

Transcribed Image Text:

Current Year Preceding Year Balance sheet: Cash $ 17,000 $ 22,000 Short-term investments... Net receivables...... Inventory.............. 11,000 26,000 54,000 73,000 77,000 71,000 Prepaid expenses. 16,000 8,000 Total current assets. $175,000 $200,000 Total current liabilities................ $131,000 $ 91,000 Income statement: Net credit sales................ $464,000 Cost of goods sold....................... 317,000