Year 2 Year 1 Cash $37,500 $32,250 Short term investment $90,000 $60,000 Account
ID: 2374668 • Letter: Y
Question
Year 2 Year 1
Cash $37,500 $32,250
Short term investment $90,000 $60,000
Accounts receivable, net $85,500 $79,500
Merchanise inventory $121,000 $125,000
Prepaid expense $12,100 $9,700
Plant Asset $388,000 $338,000
Accounts payable $113,400 $107,800
Net Sales $711,000 $676,000
Cost of goods sold $390,000 $375,000
1. Compute the working capital for year 2.
2. Compute the current ratio for year 2.
3. Compute the accounts receivable turnover for year 2
4. Compute the inventory turnover for year 2.
Explanation / Answer
working capita=37500+90000+85500+12100-113400=111700
current ratio=225100/113400=1.985
account receivable=711000/82500=8.61
inventory turnover=390000/123000=3.171
account recivable=net sales/avg.account receivable
inventory turnover=COGS/avg. inventory
avg. inventory=(121000+125000)/2=123000
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