The comparative financial statements of Norfolk Cosmetic Supply for 2018, 2017, and 2016 include the data shown here:

Requirements
1. Compute these ratios for 2018 and 2017:
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 2017 to 2018 and which ratios deteriorated? Is the trend favorable or unfavorable for the company?

Transcribed Image Text:

2016 2018 2017 Balance sheet-partial Current Assets: Cash 70,000 60,000 50,000 120,000 Short-term investments 170,000 140,000 Accounts Receivable, Net 260,000 280,000 240,000 Merchandise Inventory 355,000 330,000 310,000 Prepaid Expenses 70,000 35,000 35,000 Total Current Assets 775,000 915,000 835,000 Total Current Liabilities 560,000 630,000 640,000 Income statement-partial Net Sales (all on account) 5,890,000 5,130,000 4,210,000