The following information was extracted from the 1997 financial report of the Generic Clothing Company. 1997 1996 Current assets: Cash $ 15,000 $ 30,000 Short-term marketable securities 225,000 10,000 Accounts receivable (net) 90,000 95,000 Inventory 50,000 225,000 Prepaid insurance 20,000 25,000 Total current assets $400,000 $ 385,000 Current liabilities: Accounts payable $ 75,000 $ 60,000 Wages payable 10,000 10,000 Current portion of long-term debt 375,000 100,000 Total current liabilities $460,000 $ 170,000 required:

a. Based upon the above data, compute the following for Generic Clothing Company tor both 1996 and 1997. (1) The current ratio (2) The quick ratio

b. Assume that net credit sales for the years ended December 31, 1996 and 1997, were $780,000 and $800,000, respectively, and that the balance of Accounts Receivable as of January 1, 1996, was $100,000. Compute the receivables turnover for both years. Also compute the number of days outstanding.

c. Does it appear that the solvency position of the company improved or worsened from 1996 to 1997? Explain.