Use the following comparative income statements and balance sheets to complete the required ratio analysis.

Comparative Income Statement

For the Years Ended December 31, 20-C and 20-B

20-C 20-B

Net Sales $965,400 $1,028,600

Cost of goods sold 515,100 590,300

Gross profit $450,300 $438,300

Operating expenses

Selling expenses $142,000 $173,400

Administrative expenses 150,200 182,400

Interest expense 29,300 34,100

Total operating expenses $321,500 $389,900

Income tax expense 45,500 18,200

Total expenses $367,000 $408,100

Net income $83,300 $30,200

Comparative Balance Sheet

December 31, 20-C and 20-B

Assets 20-C 20-B

Cash $45,100 $48,500

Accounts receivable (net) 59,800 101,500

Merchandise inventory 150,900 171,600

Property, plant, and equipment (net) 710,500 808,800

Total assets $966,300 $1,130,400

Liabilities and Stockholders' Equity

Accounts payable $108,200 $151,600

Notes payable (due 6/30/-D) 70,000 70,000

Bonds payable (45% due each June) 154,000 280,000

Common stock, $10 par value 420,000 420,000

Retained earnings 214,100 208,800

Total liabilities and stockholders' equity $966,300 $1,130,400

Additional information:

All sales are made on account. Balances of selected accounts for December 31, 20-A are accounts receivable (net), $73,800; merchandise inventory, $153,100; total assets, $906,900; common stockholders' equity, $527,200; and common shares outstanding, 42,000.

20-C 20-B

Number of common shares 42,000 42,000

Dividends paid $44,400 $49,000

Required:

Prepare a liquidity analysis by calculating for 20-B and 20-C the (a) current ratio, (b) quick ratio, (c) accounts receivable turnover, and (d) merchandise inventory turnover. Indicate whether there has been an improvement or not from 20-B to 20-C. Round all answers to two decimal places.

20-C 20-B Improvement?

a.Current ratio

to 1

to 1

b.Quick ratio

to 1

to 1

c.Accounts receivable turnover

times per year

times per year

Average collection period

days

days

d.Merchandise inventory turnover

times

times

Average number of days to sell

days

days