In 20x7, Michaud Company had current assets of $155,000 and current liabilities of $100,000, of which accounts payable were $65,000. Cost of goods sold was $425,000, merchandise inventory increased by $40,000, and accounts payable were $55,000 in the prior year. In 20x8, Michaud had current assets of $210,000 and current liabilities of $160,000, of which accounts payable were $75,000. Cost of goods sold was $475,000, and merchandise inventory decreased by $15,000. Calculate Michaud working capital, payables turnover, and days’ payable for 20x7 and 20x8. Assess Michaud liquidity and cash flows in relation to the change in payables turnover from 20x7 to 20x8.

Interest Expense on Note Payable