ch.16 mastery

Liquidity and Solvency Measures Your friend, another accountant, has bet you that with your knowledge of accounting and just the computations for common analytical measures, you can figure out many aspects of a company's financial statements. You take the bet! Match each computation to one of the liquidity and solvency measures in the table. (Hint: Begin by looking for simple computations and identifying the amounts in those computations. Look for other measures that use those amounts.) Liquidity and Solvency Measures Computations Working capital $3,091,000 - $900,000 Current ratio $3,091,000+ $900,000 Quick ratio $1,866,000 $900,000 Accounts receivable turnover $8,280,000+ [/14,000 * $240.000 2 Number of days' sales in receivables [6714,000 + $740,000) + 2 + (58,200,000 365) Inventory turnover $4,100,000 1,072,000+ $1,100,000) + 2 Number of days' sales in inventory [61,072,000+ $1,100,000) + 2) + ($4,100,000 + 365) Ratio of fixed assets to long-term liabilities 2,690,000+ $1,690,000 Ratio of liabilities to stockholders' equity $2590,000 $4,015,000 (5989,400 + $127.000) $127,000 + + Times interest earned Balance Sheet December 31, 2016 Assets Current assets: Cash Marketable securities Accounts receivable (net) Inventory $823,000 329,000 714,000 1,072,000