Your investment club has accumulated money and a friend suggests that you consider buying shares in GardenWare Products, which manufactures gardening tools and products. Because you may need to sell the shares within the next few years as part of the investment clubs activities, you start your analysis of the company data by calculating (1) working capital, (2) the current ratio, and (3) the quick ratio. GardenWares statement of financial position is as follows:

Current assets
Cash		$285,000
Inventory		294,120
Prepaid expenses		27,360
Non-current assets
Land		68,000
Building and equipment		203,000
Other		20,000
Total		$897,480
Current liabilities		$228,000
Long-term debt		280,000
Share capital		160,000
Retained earnings		229,480
Total		$897,480

What amount of working capital is currently maintained?

Working capital

$Enter a dollar amount.

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Your preference is to have a quick ratio of at least 0.80 and a current ratio of at least 2.00. How do the existing ratios compare with your criteria? (Round answers to 2 decimal places, e.g. 18.42.)

Current ratio		Enter current ratio rounded to 2 decimal places. Select an option. Does not exceed the criteriaExceeds the criteria
Quick ratio		Enter quick ratio rounded to 2 decimal places. Select an option. Does not exceed the criteriaExceeds the criteria

(Liquidity and profitability analysis) Superior Kitchens and Bathrooms Ltd. is a small business that sells kitchen and bathroom fixtures and accessories and also does design and installation. The business was started three years ago by Qing Liu. Initially the companys operations consisted of kitchen and bathroom renovations for individual homes. In 2019, the company started providing design and installation services to local contractors to expand sales. As the contractor side of the business grew in 2020, the company purchased a truck for deliveries. All sales to individuals are cash on delivery, but for contracting jobs, customers are invoiced and are offered 30-day payment terms. The companys suppliers offer terms of 30 days. Selected financial information for Superior Kitchens and Bathrooms Ltd. follows.

		2020		2019
Assets
Cash		$12,152		$4,530
Accounts receivable		19,796		13,137
Inventory		15,288		8,456
Land		21,000		21,000
Building and equipment		61,400		53,300
Total assets		$129,636		$100,423
Liabilities and equity
Accounts payable		$13,400		$11,200
Short-term note payable		2,300		0
Mortgage payable current		3,900		3,900
Mortgage payable		35,100		39,000
Share capital		17,000		16,200
Retained earnings		57,936		30,123
Total liabilities and equity		$129,636		$100,423
Other information
Sales		$264,000		$221,000
Cost of goods sold		154,968		118,014
Net income		27,813		9,600

Assume the growth in sales in 2020 is primarily from the contracting business. Calculate the gross margins and the profit margins. (Round answers to 1 decimal place, e.g. 15.1%.)

		2020		2019
Gross margin		Enter percentages rounded to 1 decimal place. %		Enter percentages rounded to 1 decimal place. %
Profit margin		Enter percentages rounded to 1 decimal place. %		Enter percentages rounded to 1 decimal place. %

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Calculate the companys current ratio and quick ratio for both years. (Round answers to 2 decimal places, e.g. 1.84.)

		2020		2019
Current ratio		Enter a number of times rounded to 2 decimal places. times		Enter a number of times rounded to 2 decimal places. times
Quick ratio		Enter a number of times rounded to 2 decimal places. times		Enter a number of times rounded to 2 decimal places. times

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Calculate the companys accounts receivable turnover ratio for 2020. How quickly is the company collecting its receivables? (Round answers to 1 decimal place, e.g. 18.4.)

		2020
Accounts receivable turnover		Enter a number of times rounded to 1 decimal place. times
Average collection period		Enter a number of days rounded to 1 decimal place. days

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Assume that 50% of the sales come from the contracting business and recalculate the accounts receivable turnover for 2020. (Round answers to 1 decimal place, e.g. 18.4.)

		2020
Accounts receivable - contracting turnover		Enter a number of times rounded to 1 decimal place. times
Average collection period		Enter a number of days rounded to 1 decimal place. days

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Calculate the companys inventory turnover ratio for 2020. (Round answers to 1 decimal place, e.g. 18.4.)

		2020
Inventory turnover		Enter a number of times rounded to 1 decimal place. times

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Calculate the companys accounts payable turnover ratio for 2020. (Round answers to 1 decimal place, e.g. 18.4.)

		2020
Accounts payable turnover		Enter a number of times rounded to 1 decimal place. times