Cherokee, Inc., reported the following items at December 31, 2014, and 2013: Requirements 1. Compute Cherokees (a)

Cherokee, Inc., reported the following items at December 31, 2014, and 2013:

Requirements
1. Compute Cherokee’s
(a) Quick (acid-test) ratio
(b) Days’ sales in receivables for 2014.
Evaluate each ratio value as strong or weak. Cherokee sells on terms of net 30 days.
2. Recommend two ways for Cherokee to improve its cash flow fromreceivables.

Transcribed Image Text:

A1 Balance Sheets Summarized) Year End Year End 2014 2013 2014 2013 Current assets: Current llabilities: s 7000 13,000 Accounts payable Long-term liabilities 23,000 24,500 29,000 18,000 Other current liabilities 109,000 110,000 19,000 21,000 6 Cash Marketable securities Accounts receivable, net62,000 Other current assets 76,000 201,000 197,000 $ 304,000 $ 309,000Total liabilities and equity $ 304,000 $812,500 9 Inventory 5,000 5,000 Stockholders' equity 153,000 153,500 Total assets 309,000 12 13 Income statement (partial 2014 14 Sales Revenue