The comparative financial statements of Gold Pools, Inc., for 2017, 2016, and 2015 included the following select data:

Requirements
1. Compute these ratios for 2017 and 2016:
a. Current ratio
b. Quick (acid-test) ratio
c. Days' sales outstanding
2. Which ratios improved from 2016 to 2017 and which ratios deteriorated? Is this trend favorable or unfavorable?
3. Recommend two ways for Gold Pools to improve cash flow from receivables.

Transcribed Image Text:

(In millions) 2017 2016 2015 Balance sheet Current assets: Cash Investment in trading securities Receivables, net of allowance $ 70 150 S 50 110 175 for doubtful accounts of $7, $6, 240 300 45 $ 745 $650 and $4, respectively 270 350 70 910 260 345 20 Inventories Prepaid expenses9 860 S 620 S5,110 Total current assets Income statement Net sales (all on account)... $6,570 $5,110