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P5-69B. (Learning Objectives 1, 7: Show how to speed up cash flow from receivables; evaluate liquidity using ratios) The comparative financial statements of Diamond Pools,
P5-69B. (Learning Objectives 1, 7: Show how to speed up cash flow from receivables; evaluate liquidity using ratios) The comparative financial statements of Diamond Pools, Inc., for 2020, 2019, and 2018 included the following select data: LO 1.7 (In millions) 2020 2019 2018 Balance sheet Current assets: s 90 $ 95 180 S 60 115 Investment in trading securities..150 Receivables, net of allowance for uncollectible accounts of $7, $6, and $4, respectively 280 230 325 35 765 S 650 340 50 Prepaid expenses Total current assets $ 900 950 640 Total current liabilit S50 Income statement Net sales (all on account$7,700 $5,355 $4,74S 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 deleriorated? Are each of the trends favorable or unfavorable? 3. Recommend two ways for Diamond Pool Is to improve cash flows from receivables
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