Question
A firms balance sheets for the last two years are as follows: YEAR 20X1 Assets Liabilities and Equity Cash $ 8,000 Accounts payable $ 14,000
A firms balance sheets for the last two years are as follows:
YEAR 20X1 | ||||||
Assets | Liabilities and Equity | |||||
Cash | $ | 8,000 | Accounts payable | $ | 14,000 | |
Accruals | 19,000 | |||||
Accounts receivable | 22,000 | Current bank note | 6,000 | |||
Inventory | 18,000 | Long-term debt | 57,000 | |||
Plant and equipment | 82,000 | Common stock | 12,000 | |||
Retained earnings | 22,000 | |||||
$ | 130,000 | $ | 130,000 | |||
YEAR 20X2 | ||||||
Assets | Liabilities and Equity | |||||
Cash | $ | 7,000 | Accounts payable | $ | 11,000 | |
Accruals | 5,000 | |||||
Accounts receivable | 23,000 | Current bank note | 5,000 | |||
Inventory | 18,000 | Long-term debt | 69,000 | |||
Plant and equipment | 82,000 | Common stock | 17,000 | |||
Retained earnings | 23,000 | |||||
$ | 130,000 | $ | 130,000 | |||
Sales in 20X1 were $335,000. Sales in 20X2 were $335,000.
- Based solely on the current ratio and the quick ratio, has the firms liquidity position deteriorated or improved? Round your answers to two decimal places.
Current ratios:
20x1:
20x2
Quick ratios:
20x1:
20x2:
The firms liquidity position has ______(deteriorated, improved, remained the same)
B. Without doing a calculation, has days sales outstanding (receivables turnover) improved?
Days sale outstanding has _____(deteriorated, improved, remained the same)
C. Without doing a calculation, has inventory turnover deteriorated?
Inventory turnover has _____(deteriorated, improved, remained the same)
D. If the firm earned $7,000 during 20X2, what proportion of those earnings were distributed? Round your answer to two decimal places. ___%
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