Northern Products reported the following amounts in its 2019 financial statements. The 2018 amounts are given for comparison.

Requirements

1. Compute Northern’s quick (acid-test) ratio at the end of 2019. Round to two decimal places. How does the quick ratio compare with the industry average of 0.92?

2. Compare days’ sales outstanding for 2019 with the company’s credit terms of net 30 days.

Transcribed Image Text:

2019 2018 Current assets: $ 9,500 $ 9,500 Cash. . Short-term investments. 10,500 7,000 Accounts receivable.. $86,500 $70,100 Less: Allowance for (7,500) (5,500) uncollectibles.. 79,000 189,000 64,600 190,000 2,200 273,300 106,000 734,000 Inventory.. Prepaid insurance. Total current assets 2,200 290,200 99,000 1,077,000 Total current liabilities. Net sales (all on account) ..