The comparative financial statements of Lakeland Cosmetic Supply for 2014, 2013, and 2012 include the data shown here:

Requirements
1. Compute these ratios for 2014 and 2013:
a. Acid-test ratio (Round to two decimals.)
b. Accounts receivable turnover (Round to two decimals.)
c. Days’ sales in receivables (Round to the nearest whole day.)
2. Considering each ratio individually, which ratios improved from 2013 to 2014 and which ratios deteriorated? Is the trend favorable or unfavorable for thecompany?

Transcribed Image Text:

2014 2013 2012 Balance sheet-partial Current Assets: Cash Short-term investments Accounts Receivable, Net Merchandise Inventory Prepaid Expenses Total Current Assets Total Current Liabilities 5 90,000 70,000 30,000 125,000 250,000 325,000 50,000 955,000 855,000 $780,000 $ 560,000 600,000 690,000 145,000 290,000 370,000 60,000 175,000 260,000 335,000 15,000 Income statement-partial Net Sales (all on account) $5,860,000 5,140,000 $4,200,000