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PROBLEM SOLVING Answer the following items using the financial statements below. Encircle the letter of the correct answer. Show your computations. (8 items x 5
PROBLEM SOLVING Answer the following items using the financial statements below. Encircle the letter of the correct answer. Show your computations. (8 items x 5 points) ABC Corporation Comparative Statement of Financial Position For the Years Ended 2018 and 201A (in pesos) 201B 201A Cash and Cash Equivalents 2,450 2,094 Receivables 1,813 1,611 Inventories 1,324 1,060 Prepaid Expenses 1,709 2.120 Total Current Assets 7.296 6885 Noncurrent Assets 18,500 15,737 Total Assets 25,796 22.622 Current Liabilities 7.230 8,467 Long-Term Liabilities 4,798 3,792 Common Stock 6.568 4.363 Retained Earnings 7.200 6.000 Total Liabilities and Equity 25,796 22.622 ABC Corporation Income Statement For the Year Ended 2018 (in pesos) 201B Sales 20,941 Less: Cost of Goods Sold 7,055 Gross Profit 13,886 Less: Operating expenses 7,065 Income from operations 6,821 Less: Interest expense 210 Income before taxes 6,611 Less: Income tax 2,563 Net Income 4,048 1. Which statement best describes ABC's acid-test ratio for 2018? a. Greater than 1 C. Less than 1 b. Equal to 1 d. None of the above 2. Inventory turnover (amount rounded)? a. Six (6) times C. Eight (8) times b. Seven (7) times d. Cannot be determined 3. Days' sales in receivables (amounts rounded)? a. 28 days C. 32 days b. 30 days d. 34 days 4. Times-interest-earned ratio? a. 54.7% C. 32 times b. 19 times d. 34 times
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