The comparative financial statements of Sopa Company for 2014, 2013, and 2012 included the following selected data:

Required
1. Compute these ratios for 2014 and 2013:
a. Current ratio
b. Acid-test ratio
c. Days' sales in receivables
2. Write a memo explaining to Tony Crane, owner of Sopa Company, which ratio values showed improvement from 2013 to 2014 and which ratio values deteriorated. Discuss whether this trend is favourable or unfavourable for the company.

Transcribed Image Text:

2013 2014 2012 (In thousands) Balance Sheet Current assets: Cash 80 80 %24 40 Short-term investments 280 400 240 Receivables, net 760 600 480 1,360 Inventories 1,680 1,520 Prepaid expenses 120 120 80 $ 2,920 $ 1,920 $ 2,720 $ 1,640 $ 2,200 Total current assets Total current liabilities $1,520 Income Statement $7,600 Sales revenue $10,400 $10,000