A firm’s balance sheets for the last two years are as follows (refer to image): Sales in 20X1 were $250,000. Sales in 20X2 were $250,000. a. Based solely on the current ratio and the quick ratio, has the firm’s liquidity position deteriorated or improved? b. Without doing a calculation, has days sales outstanding (receivables turnover) improved? How do you know? c. Without doing a calculation, has inventory turnover deteriorated? How do you know?
A firm’s balance sheets for the last two years are as follows (refer to image): Sales in 20X1 were $250,000. Sales in 20X2 were $250,000. a. Based solely on the current ratio and the quick ratio, has the firm’s liquidity position deteriorated or improved? b. Without doing a calculation, has days sales outstanding (receivables turnover) improved? How do you know? c. Without doing a calculation, has inventory turnover deteriorated? How do you know?
Cornerstones of Financial Accounting
4th Edition
ISBN:9781337690881
Author:Jay Rich, Jeff Jones
Publisher:Jay Rich, Jeff Jones
Chapter12: Fainancial Statement Analysis
Section: Chapter Questions
Problem 18MCQ
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A firm’s balance sheets for the last two years are as follows (refer to image):
Sales in 20X1 were $250,000. Sales in 20X2 were $250,000.
a. Based solely on the current ratio and the quick ratio, has the firm’s liquidity position deteriorated or improved?
b. Without doing a calculation, has days sales outstanding (receivables turnover) improved? How do you know?
c. Without doing a calculation, has inventory turnover deteriorated? How do you know?
d. If the firm earned $5,000 during 2012, what proportion of those earnings
were distributed?
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