The comparative financial statements of New World Piano Company for 20X3, 20X2, and 20X1 included the following selected data:

Required
1. Compute these ratios for 20X3 and 20X2:
a. Current ratio

b. Acid-test ratio

c. Days' sales in receivables
2. Write a memo explaining to top management which ratio values showed improvement from 20X2 to 20X3 and which ratio values deteriorated. State whether the overall trend is favorable or unfavorable for the company and give the reason for your evaluation.

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20X3 20X2 20X1 (In millions) Balance sheet: Current assets: Cash Short-term investments Receivables, net of allowance $ 67$ 66 101 62 69 93 for doubtful accounts of $7, $6 and $4, respectively Inventories Prepaid expenses Total current assets 206 408 32 806 154 383 31 735 197 341 25 694 Total current liabilities 440 416 388 Income statement: Net sales $2,071$2,005 $%1,944