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How to complete question 66PB in Chapter 5, step by step. In the textbook Financial Accounting, 12th Edition, ISBN 9780134725987 (Learning Objectives 6, 7: Show
How to complete question 66PB in Chapter 5, step by step. In the textbook "Financial Accounting, 12th Edition, ISBN 9780134725987"
(Learning Objectives 6, 7: Show how to speed up cash flow from receivables; evaluate liquidity using ratios) The comparative financial statements of Gold Pools, Inc., for 2017, 2016, and 2015 included the following select data: (In millions 2016 $ 60 175 2017 Balance sheet Current assets: Cash............ ...... $ 70 Investment in trading securities ...... 150 Receivables, net of allowance for doubtful accounts of $7, $6, and $4, respectively 270 Inventories ...... 350 Prepaid expenses ......... Total current assets ......... 910 Total current liabilities.......... Income statement Net sales (all on account................. $6,570 70 260 345 20 $ 860 $ 620 $ 560 $5,110 Requirements 1. Compute these ratios for 2017 and 2016: a. Current ratio b. Quick (acid-test) ratio c. Days' sales outstanding 2. Which ratios improved from 2016 to 2017 and which ratios deteriorated? Is this trend favorable or unfavorable? 3. Recommend two ways for Gold Pools to improve cash flow from receivablesStep by Step Solution
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