Finance Homework 2

# Current ratio current assets current liabilities

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current ratio= current assets/ current liabilities Quick ratio= quick assets/ current liabilities a. Current ratio= 50,000/40,000= 1.25 Quick ratio= 0/40,000= 0 b. Current ratio= 70,000/40,000= 1.75 Quick ratio= 0/40,000= 0 c. Current ratio= 35,000/40,000= .875 Quick ratio= 70,000/40,000= 1.75 d. The change in the ratios is due to both the firm’s seasonality and the recorded profit of \$20,000. The profit occurred in quarter 3 due to the sale of all the firm’s inventory during its busy season in quarter 2. 10. accounts receivable turnover= credit sales/ average accounts receivable Collection period= (average accounts receivable/ credit sales) x 360 a. accounts receivable turnover= 4,500,000/ 500,000= 9 collection period= (500,000/4,500,000) x 360= 40 b. accounts receivable turnover= 6,750,000/ 500,000= 13.5 collection period= (500,000/ 6,750,00) x 360= 26.667 c. accounts receivable turnover=8,100,000 / 500,000= 16.2 collection period= (500,000/ 8,100,00) x 360= 22.222 d. accounts receivable turnover= 9,000,000/ 500,000= 18 collection period= (500,000/9,000,000) x 360= 20 12. inventory turnover= cost of goods sold/ average inventory Inventory days= (average inventory/ cost of goods sold) x 360 a. inventory turnover 5= 2,500,000/ x= 500,000 b. inventory days 60=(x/ 2,500,000) x 360= 416,666.667 c. inventory turnover 15= 2,500,000/x= 166,666. 667 d. inventory days 5= (x/ 2,500,000) x 360= 34,722.22 14. accounts payable turnover= purchases/ average accounts payable Payable period= (average accounts payable/ purchases) x 360 a. accounts payable turnover 10= 400,000/ x= 40,000 b. payable period 45= (x/400,000) x 360= 50,000 c. accounts payable 20= 400,000/ x= 20,000 d. payable period 10= (x/400,000) x 360= 11111.11

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18. fixed asset turnover= sales/ average fixed assets
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• Spring '10
• MARGSIRI
• Generally Accepted Accounting Principles, average total assets, Assets/ Current Liabilities, profit margin= earnings

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