TESU Finance Analysis of Financial Statements Current & Quick Ratios Calculations

Question Description

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8. Given the following information, compute the current and quick ratios

Cash $100,000

Accounts receivable $357,000

Inventory $458,000

Current Liabilities $498,000

Long Term debt $610,000

Equity $598,000

9. If a firm has sales of $25,689,000 a year, and the average collection period for the industry is 45 days, what should this firm’s accounts receivable be if the firm is comparable to the industry?

11. A firm with sales of $500,000 has average inventory of $200,000. The industry average for inventory turnover is four times a year. What would be the reduction in inventory if this firm were to achieve a turnover comparable to the industry average?

Prof. Angela

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