Question
Shown below are selected financial data for Company A and Company B at the end of the current year: Company A Company B Net credit
Shown below are selected financial data for Company A and Company B at the end of the current year:
|
| Company A | Company B |
| Net credit sales | $675,000 | $560,000 |
| Cost of goods sold | 504,000 | 480,000 |
| Cash | 53,000 | 22,000 |
| Accounts receivable (net) | 75,000 | 70,000 |
| Inventory | 84,000 | 160,000 |
| Current liabilities | 105,000 | 100,000 |
a) For each of the two companies, compute the following and FILL THE TABLE (10 points)
|
| Company A | Company B |
| Working capital |
|
|
| Current ratio |
|
|
| Quick ratio |
|
|
| Accounts receivable turnover rate |
|
|
| Inventory turnover rate |
|
|
Working capital:
Company A:
Company B:
Current ratio:
Company A:
Company B:
Quick ratio:
Company A:
Company B:
Accounts receivable turnover rate
Company A:
Company B:
Inventory turnover rate
Company A:
Company B:
b) To which company would you prefer to sell $25,000 in merchandise on a 30-day open account? Company A or Company B.? Why? Explain (5 points)
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access with AI-Powered Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started