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Assignment #5 (Graded) 3.33%: Prepaid Interest 54,500 Short Term Investments 60,500 Prepaid Advertising 117,000

The document contains calculations of various financial ratios for a company: 1. The working capital ratio is -305,500, indicating the company has more current liabilities than current assets. 2. The current ratio is 1.35, meaning the company has $1.35 in current assets for every $1 in current liabilities. 3. The acid-test ratio is 0.45, showing the company has $0.45 in quick assets for every $1 in current liabilities. 4. The accounts receivable collection period is 58.54 days, indicating on average it takes 58 days to collect on credit sales. 5. The number of days sales in inventory ratio is

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46 views

Assignment #5 (Graded) 3.33%: Prepaid Interest 54,500 Short Term Investments 60,500 Prepaid Advertising 117,000

The document contains calculations of various financial ratios for a company: 1. The working capital ratio is -305,500, indicating the company has more current liabilities than current assets. 2. The current ratio is 1.35, meaning the company has $1.35 in current assets for every $1 in current liabilities. 3. The acid-test ratio is 0.45, showing the company has $0.45 in quick assets for every $1 in current liabilities. 4. The accounts receivable collection period is 58.54 days, indicating on average it takes 58 days to collect on credit sales. 5. The number of days sales in inventory ratio is

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Assignment #5 (graded) 3.

33%

1.) Working Capital Ratio

Item Amount
Prepaid interest 54,500
Short term investments 60,500
Prepaid advertising 117,000
Total current assets 232,000

Unearned revenue 174,500


Rent payable 199,500
Interest payable 163,500
Total current liabilities 537,500

Current assets – current liabilities = working capital

232,000 – 537500 = -305,500

2.) Current Ratio


Item Amount
Prepaid rent 115,500
Accounts receivable 14,900
Merchandise Inventory 192,500
Prepaid Advertising 182,000
Total current assets 504,900

Unearned revenue 177,000


Salaries Payable 197,000
Total current liabilities 374,000

Current Asset 504,900


Current Liabilities 374,000
Current ratio 1.35

3.) Acid-test Ratio


Item Amount
Cash 146,000
Short-term investments 22,000
Accounts receivable 156,500
Prepaid rent 133,000
Total current assets 457,500

Salaries payable 63,000


Accounts payable 167,500
Interest payable 171,500
Rent payable 162,000
Mortgage payable 153,500
Total current liabilities 717,500

Current Asset less prepaid rent 324,500


Current liabilities 717,500
Acid Test Ratio 0.45

4.) Accounts Receivable Collection Period

Item Amount (2022)


Ave. Accounts Receivable 17,000
/Sales 106,000
0.160 x 365 days
Accounts Receivable Collection Period 58.54
5.) Number of days Sales in Inventory Ratio

Item Amount (2022)


Ave. Merchandise Inventory 21,500
/Cost of Goods Sold 47,500
0.452 x 365 days
Number of days sales in inventory ratio 165.21

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