Excerpts from Stepney Corporation\'s most recent balance sheet (in thousands of
ID: 2459316 • Letter: E
Question
Excerpts from Stepney Corporation's most recent balance sheet (in thousands of dollars) appear below:
Sales on account during the year totaled $1,570 thousand. Cost of goods sold was $955 thousand.
Compute the following current ratio for Year 2. (Round your answer to 2 decimal places.)
Compute the following acid-test ratio for Year 2. (Round your answer to 2 decimal places.)
Compute the following accounts receivable turnover for Year 2. (Round your answer to 2 decimal places.)
Compute the following average collection period for Year 2. (Use 365 days in a year. Round your intermediate calculations to 2 decimals places and your final answer to 1 decimal place.)
Compute the following inventory turnover for Year 2. (Round your answer to 2 decimal places. Omit the "$" sign in your response.)
Compute the following average sale period for Year 2. (Use 365 days in a year. Round your intermediate calculations to 2 decimals places and your final answer to 1 decimal place.)
Excerpts from Stepney Corporation's most recent balance sheet (in thousands of dollars) appear below:
Explanation / Answer
a)Working capital for Year-2 = Total Current Assets - Total Current Liabilities
= 689 - 339
= $350
..
b)Current Ratio for year-2 = 689/339
= 2.03
..
c)Acid-Test Ratio of Year-2 = (Total Current Assets - Inventory - Prepaid Expenses)/Total current liabilities
= (689-130-59)/339
= 500/339
= 1.47
..
..
d)Accounts Receivable Turnover for year-2 = 1570/[(250+260)/2]
= 1570/255
= 6.16
..
e)Average Collection Period = 365/6.16
= 59.25 days
..
..
f)Inventory Turnover ratio = 955/[(130+130)/2]
= 955/130
= 7.35
.
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