LO6 Evaluate the acid-test ratio and days' sales in receivables 1 2 3 4 5 6 7 8 9 10 11 12 S4-16 Botany Clothiers reported the following amounts in its 20X2 financial statements. The 20X1 figures are given for comparison. Current assets: Cash Short-term investments Accounts receivable Less allowance for uncollectibles Inventory Prepaid insurance Total current assets. Total current liabilities Net sales Requirements 20X2 $ 60.000 account. (5,000) $ 9,000 12,000 55,000 170,000 1,000 $ 247.000 $80,000 $803,000 20X1 $ 54,000 (5,000) 5 7,000 10,000 49,000 172,000 1,000 $ 239,000 $ 70,000 $750,000 1. Compute Botany's acid-test ratio at the end of 20X2. Round to two decimal places. How does the acid- test ratio compare with the industry average of 0.95? 2. Compare Botany's days' sales in receivables measure for 20X2 with the company's credit terms of net 30 days. Assume all sales are on 3. Recommend two ways that Botany Clothiers can speed up cash flow from its accounts receivable.

LO6 Evaluate the acid-test ratio and days' sales in receivables. S4-16 Botany Clothiers reported the following amounts in its 202 financial statements. The 20X1 figures are given for comparison. Requirements 1. Compute Botany's acid-test ratio at the end of 20X2. Round to two decimal places. How does the acidtest ratio compare with the industry average of 0.95 ? 2. Compare Botany's days' sales in receivables measure for 20X2 with the company's credit terms of net 30 days. Assume all sales are on account. 3. Recommend two ways that Botany Clothiers can speed up cash flow from its accounts receivable