Short-Term Solvency Ratios (LO5)

Following are financial data from year-end financial statements of York Company for 2012, 2011 and 2010.

2012 2011 2010 INGCOUMISINCCCIVADI Om ateeeiaks rari 2 2 $ 153,000 $ 165,000 $ 150,000 COM Ci CeweNSelels ouutdngoatymeune beara oe 1,680,000 1,450,000 1,600,000 GuITKeninaSSClOMee rere aloe ocular cueas 750,000 600,000 675,000 GUrFentwiabilitiesas eel to eeiemaciac cloes ecu. se 525,000 450,000 500,000 TVG IM LONY aemenenaarrteetes tater rie arcsec are ce snarave ccs 375,000 275,000 325,000 CEIRS) a heak ees Gare eo eee 1,850,000 2,000,000 1,750,000 Required

a. Compute the following financial ratios for 2011 and 2012. (Round calculations to two decimal places.)

1. Current ratio 2. Acid test ratio 3. Inventory turnover 4. Days receivables outstanding

b. Comment on the short-term solvency of York Company for 2011 and 2012. Did the company’s short-term solvency improve or deteriorate during 2012? Explain. LO.1