In 2010, Ronaldo Company had current assets of $620,000 and current liabilities of $400,000, of which accounts payable were $260,000. Cost of goods sold was $1,700,000, merchandise inventory increased by $160,000, and accounts payable were $220,000 in the prior year. In 2011, Ronaldo had current assets of $840,000 and current liabilities of $640,000, of which accounts payable were $300,000. Cost of goods sold was $1,900,000, and merchandise inventory decreased by $60,000. Calculate Ronaldo’s working capital, payables turnover, and days’ payable for 2010 and 2011. Assess Ronaldo’s liquidity and cash flows in relation to the change in the payables turnover from 2010 to 2011.
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