Liquidity Analysis

The following selected information is taken from the financial statements of Arnn Company for its most recent year of operations:

Beginning balances:

Inventory $200,000

Accounts receivable 300,000

Ending balances:

Inventory $250,000

Accounts receivable 400,000

Cash 100,000

Marketable securities (short-term) 200,000

Prepaid expenses 50,000

Accounts payable 175,000

Taxes payable 85,000

Wages payable 90,000

Short -term loans payable 50,000

During the year, Arn had net sales of $2.45 million. The cost of goods sold was $1.3 million.

Note: Round al answers to two decimal places. .

1.Compute the current ratio.

2.Compute the quick or acid-test ratio.

3. Compute the accounts receivable turnover ratio.

4. Compute the accounts receivable turnover in days.

5.Compute the inventory turnover ratio.

6. Compute the inventory turnover in days.

Answer rating: 100% (QA)

Current Ratio The current ratio measures a companys overall ability to pay its current liabilities with its current assets Formula Current Ratio Current Assets Current Liabilities Calculation Current ... View the full answer