Financial Ratios Financial statements for McDonald Carpeting Company for the year ended December 31, 20-- are shown. McDonald Carpeting Co. Income Statement For Year Ended December 31, 20- Revenue from sales: Sales $122.900 Less sales returns and allowances 1,058 Net sales $121,842 Cost of goods sold: Merchandise inventory, January 1, 20-- $17.900 Estimated returns inventory, January 1, 20-- 1,290 $19,190 Purchases $62,920 Less: Purchases returns and allowances $2,784 Purchases discounts 1,954 4,738 Net purchases $58,182 Add freight-in 952 Cost of goods purchased 59,134 Goods available for sale $78,324 Less: Merchandise inventory $15.984 Estimated returns inventory 650 16,634 Cost of goods sold 61,690 Gross profit $60,152 Operating expenses: Wages expense $17,618 Advertising expense Supplies expense 316 Phone expense 1,192 Utilities expense 7,832 Insurance expense 834 Depreciation expense--building 3,420 Depreciation expense-equipment 2,564 Miscellaneous expense 182 Total operating expenses 34,942 Income from operations $25,210 Other revenues: Interest revenue $2,818 Other expenses: Interest expense 2,142 676 Net Income $25,886 984 McDonald Carpeting Co. Statement of Owner's Equity For Year Ended December 31, 20- C. S. McDonald, capital, January 1, 20-- $50,766 Net income for the year $25,886 Less withdrawals for the year 10,060 Increase in capital 15.826 C. S. McDonald, capital, December 31, $56,592 20-- McDonald Carpeting Co. Balance Sheet December 31, 20- Assets Current assets: Cash $10,980 Accounts receivable 8,860 Merchandise inventory, December 31, 20- $15,984 Estimated returns inventory, December 31, 650 16,634 20-- Supplies 1.242 Prepaid insurance 734 Total current assets $35,450 Property, plant, and equipment: Building $59,500 Less accumulated depreciation-building 18,180 $41.320 Equipment $21,906 Less accumulated depreciation-equipment 6,338 15.568 Total property, plant, and equipment 56,888 Total assets $95,338 Liabilities Current liabilities: Accounts payable $7.540 Customer refunds payable 890 Wages payable 262 Sales tax payable 1,034 Mortgage payable (current portion) 550 Total current liabilities $10,276 Long-term liabilities: Mortgage payable $19,020 Less current portion 550 18,470 Total liabilities $28,746 Owner's Equity C. S. McDonald, capital 66,592 Total liabilities and owner's equity $95.338 $7,540 890 262 1,034 550 $10,276 Current liabilities: Accounts payable Customer refunds payable Wages payable Sales tax payable Mortgage payable (current portion) Total current liabilities Long-term liabilities: Mortgage payable Less current portion Total liabilities Owner's Equity C. S. McDonald, capital Total liabilities and owner's equity $19,020 550 18,470 $28,746 66,592 $95,338 All sales are credit sales. The balance of Accounts Receivable on January 1, 20-, was $6,794. Required: Compute the financial ratios. Financial Ratios 28,174 3.74 to 1 1.93 to 1 44.1 % 1. Working capital 2. Current ratio (Round to two decimals) 3. Quick ratio (Round to two decimals) 4. Return on owner's equity (Round to one decimal) 5. Accounts receivable turnover (Round to one decimal) Average number of days required to collect receivables (Round to one decimal) 6. Inventory turnover (Round to two decimals) Average number of days required to sell inventory (Round to two decimals) 15.6 23.4 days 3.52 X days