Problem 6 (20 points)

Unity designs and manufactures uniforms for corporation throughout the United States. Selected finacial information follows. Compute the following ratios for Year 2: receivable turnover ratio (assume that 80% of sales were credit sales), inventory turnover ratio, cash ratio, times interest earned ratio, and cash coverage ratio.

	Year 2	Year 1
Net income	$60,000
Net sales revenue	$1,200,000
Cost of goods sold	$650,000
Interest expense	$25,000
Income tax expense	$65,000
Cash and cash equivalents	$12,000	$15,000
Accounts receivable	$120,000	$160,000
Inventories	$65,000	$60,000
Accounts payable	$20,000	$21,000
Current accrued expenses	$22,000	$20,000
Current portion of long-term debt	$40,000	$35,000
Cash flows from operating activities	$170,000
Cash paid for interest	$20,000