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P5-61A. (Learning Objectives 1, 7: Show how to speed up cash flow from receivables; evaluate liquidity using ratios) The comparative financial statements of Sunset Pools,

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P5-61A. (Learning Objectives 1, 7: Show how to speed up cash flow from receivables; evaluate liquidity using ratios) The comparative financial statements of Sunset Pools, Inc., for 2020, 2019, and 2018 included the following select data: (In millions) 2019 2018 $ 60 175 $ 40 110 2020 Balance sheet Current assets: Cash..... $ 85 Investment in trading securities..... 160 Receivables, net of allowance for uncollectible accounts of $7, $6, and $4, respectively 270 Inventories 360 Prepaid expenses 60 Total current assets $ 935 Total current liabilities. $ 620 Income statement Net sales (all on account) $7,685 260 335 45 $ 875 $ 635 240 320 70 $ 780 $ 670 $5,500 $5,110 Requirements 1. Compute the following ratios for 2020 and 2019: a. Current ratio b. Quick (acid-test) ratio c. Days' sales outstanding 2. Which ratios improved from 2019 to 2020 and which ratios deteriorated? Are each of the trends favorable or unfavorable

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