Assignment title is: Liquidity

The following financial data were taken from the annual financial statements of Smith Corporation:

2017 2018 2019

Current assets $ 450,000 $ 400,000 $ 500,000

Current liabilities 390,000 300,000 340,000

Sales 1,450,000 1,500,000 1,400,000

Cost of sales 1,180,000 1,020,000 1,120,000

Inventory 280,000 200,000 250,000

Accounts receivable 120,000 110,000 105,000

Required: (10 Marks)

1. Based on these data, calculate the following for 2018 and 2019

1. Working capital
2. Current ratio
3. Acid-test ratio
4. Accounts receivable turnover
5. Merchandise inventory turnover
6. Inventory turnover in days
7. Accounts receivable turnover in days
8. Operating cycle

2. Evaluate the results of your computations in regard to the short-term liquidity of the firm