a Current ratio is 080 b Acid test ratio is 046 Heritage Mills Balance Sheet

# A current ratio is 080 b acid test ratio is 046

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a. Current ratio is 0.80. b. Acid-test ratio is 0.46 . Heritage Mills Balance Sheet December 31, 2016 (in thousands) Assets Liabilities Cash \$55Total Current Liabilities \$2,500 Accounts Receivables 1,095Long-term Note Payable 1,200 Merchandise Inventory 700Other Long-term Liabilities 700 Prepaid Expenses 150 Total Liabilities 4,400 Total Current Assets 2,000 Plant Assets, Net 2,850 Stockholders' Equity Other Assets 2,250 Stockholders' Equity 2,700 Total Assets \$ 7,100 Total Liabilities and Stockholders' Equity \$ 7,100 E15-19 (similar to) Data for Research Enterprises follows: 2017 2016 2015 Total Current Assets \$410,000 \$300,000 \$260,000 Total Current Liabilities 195,000 150,000 130,000 Compute the dollar amount of change and the percentage of change in Research Enterprises's working capital each year during 2017and 2016 . What do the calculated changes indicate? Begin by selecting the formula to compute the working capital, the dollar amount of change and the percentage of change in Research Enterprises' working capital. Begin by selecting the formula to compute the working capital, the dollar amount of change and the percentage of change in Expert Enterprises' working capital. Working capital = Current assets - Current liabilities Dollar amount of change = Later period amount - Earlier period amount Percentage of change = (Dollar amount of change / Base period amount) x 100 First, calculate the amount and percentage of change in working capital in 2016 (Round the percentage to one decimal place, X.X%.) The amount of change in working capital is \$ 20,000. The percentage of change in working capital is 15.4%. Next, calculate the amount and percentage of change in working capital in 2017. (Round the percentage to one decimal place, X.X%.) The amount of change in working capital is \$ 65,000.The percentage of change in working capital is 43.3%. What do the calculated changes indicate? Expert Enterprises' working capital has improved year over year from 2015to 2017. E15-20 The financial statements of Jim'sNatural Foods include the following items: Current Year Preceding Year Balance Sheet: Cash \$25,000 \$26,000 Short-term Investments 9,000 20,000 Net Accounts Receivables 54,000 82,000 Merchandise Inventory 68,000 80,000 Prepaid Expenses 11,000 7,000 Total Current Assets 167,000 215,000 Total Current Liabilities 140,000 83,000 Income Statement: Net Credit Sales \$480,000 Cost of Goods Sold 313,000 a. Current ratio e. Days' sales in inventory b. Cash ratio f. Days' sales in receivables c. Acid-test ratio g. Gross profit percentage d. Inventory turnover a. Compute the current ratio for the current year. (Abbreviations used: STI = Short-term investments. Round your answer to two decimal places, X.XX.) Current ratio = Total current assets / Total current liabilities = 1.19 b. Compute the cash ratio for the current year. (Round your answer to two decimal places, X.XX.) Cash ratio = (Cash + Cash equivalents) / Total current liabilities = 0.18 c. Compute the acid-test ratio for the current year. (Round your answer to two decimal places, X.XX.) Acid-test ratio = (Cash + STI + Net current receivables) / Total current liabilities = 0.63 d. Compute the inventory turnover for the current year. (Round your answer to two decimal places, X.XX.) Inventory turnover = Cost of goods sold / Average merchandise inventory = 4.23time e. Compute the days' sales in inventory for the current year. (Round intermediary calculations to two decimal places,  #### You've reached the end of your free preview.

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