The balance sheets for Plasma Screens Corporation and additional information are provided below. Additional Information for 2015:
Question:
The balance sheets for Plasma Screens Corporation and additional information are provided below.
Additional Information for 2015:
1. Net income is $79,000.
2. Sales on account are $1,890,000.
3. Cost of goods sold is $1,394,250.
Required:
1. Calculate the following risk ratios for 2015:
a. Receivables turnover ratio.
b. Inventory turnover ratio.
c. Current ratio.
d. Acid-test ratio.
e. Debt to equity ratio.
2. When we compare two companies, can one have a higher current ratio while the other has a higher acid-test ratio? Explain youranswer.
Inventory Turnover RatioThe inventory turnover ratio is a ratio of cost of goods sold to its average inventory. It is measured in times with respect to the cost of goods sold in a year normally. Inventory Turnover Ratio FormulaWhere,...
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Related Book For
Financial Accounting
ISBN: 978-0078025549
3rd edition
Authors: J. David Spiceland, Wayne Thomas, Don Herrmann
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