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Problem 9-16

A firms balance sheets for the last two years are as follows:

YEAR 20X1
Assets				Liabilities and Equity
Cash	$	12,000		Accounts payable	$	11,000
				Accruals		14,000
Accounts receivable		30,000		Current bank note		5,000
Inventory		25,000		Long-term debt		56,000
Plant and equipment		53,000		Common stock		14,000
				Retained earnings		20,000
	$	120,000			$	120,000

YEAR 20X2
Assets				Liabilities and Equity
Cash	$	21,000		Accounts payable	$	13,000
				Accruals		20,000
Accounts receivable		21,000		Current bank note		8,000
Inventory		25,000		Long-term debt		35,000
Plant and equipment		53,000		Common stock		20,000
				Retained earnings		24,000
	$	120,000			$	120,000

Sales in 20X1 were $210,000. Sales in 20X2 were $210,000.

Current ratios:

20x1:

20x2:

Quick ratios:

20x1:

20x2:

The firms liquidity position has -Select-deterioratedimprovedremained the sameItem 5 .

Days sale outstanding has -Select-deterioratedimprovedremained the sameItem 6 .

Inventory turnover has -Select-deterioratedimprovedremained the sameItem 7 .

%

1. 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.
2. Without doing a calculation, has days sales outstanding (receivables turnover) improved?
3. Without doing a calculation, has inventory turnover deteriorated?
4. If the firm earned $7,000 during 20X2, what proportion of those earnings were distributed? Round your answer to two decimal places.