Computation and evaluation of activity ratios. The following data relate to Alaska Products Inc.:

	20X5	20X4
Net Credit Sales	$842,000	$760,000
Cost of Goods Sold	450,000	350,000
Cash, Dec. 31	125,000	110,000
Accounts Receivable, Dec. 31	180,000	140,000
Inventory, Dec. 31	70,000	50,000
Accounts Payable, Dec. 31	115,000	108,000

The company is planning to borrow $300,000 via a 90-day bank loan to cover short-term operating needs.

Compute the accounts-receivable and inventory-turnover ratios for 20X5. Alaska rounds all calculations to two decimal places.

Study the ratios from part (a) and comment on the company's ability to repay a bank loan in 90 days.

Suppose that Alaska's major line of business involves the processing and distribution of fresh and frozen fish throughout the United States. Do you have any concerns about the company's inventory-turnover ratio? Briefly discuss.

	Account to be changed	Original Amount	Jan - Feb
	Ch 9 Ex 4
	20X5	20X4	20X5	20X4
Net Credit Sales	$842,000	760000.00	842,000	760,000
Cost of Goods Sold	45,000	350000.00	450,000	350,000
	Questions	YOUR ANSWERS BASED UPON COURSE START DATE
	The company is planning to borrow $300,000 via a 90-day bank loan to cover short-term operating needs.
	a. Compute the accounts-receivable and inventory-turnover ratios for 20X5
	Accounts Receivable Turnover
	Inventory Turnover
	Study the ratios from part (a) and comment on the company's ability to repay a bank loan in 90 days.
	Suppose that Alaska's major line of business involves the processing and distribution of fresh and frozen fish throughout the United States. Do you have any concerns about the company's inventory-turnover ratio? Briefly discuss.