The comparative financial statements of Perfection 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 dollar.)

2. Considering each ratio individually, which ratios improved from 2013 to 2014 and which ratios deteriorated? Is the trend favorable or unfavorable for the company?

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 S 60,000 155,000 300,000 355,000 75,000 $ 945,000 $ 590,000 S 50,000 155,000 240,000 320,000 25,000 $ 790,000 $ 580,000 S 60,000 120,000 260,000 320,000 55,000 815,000 680,000 Income statement-partial Net Sales (all on account) 3 5,830,000 5,110,000 4,210,000