The comparative financial statements of Perfection Cosmetic Supply for 2012, 2011, and 2010 include the data that follow:

Requirements
1. Compute these ratios for 2012 and 2011:
a. Acid-test ratio
b. Days€™ sales in receivables
c. Accounts receivable turnover
2. Considering each ratio individually, which ratios improved from 2011 to 2012 and which ratios deteriorated? Is the trend favorable or unfavorable for thecompany?

Transcribed Image Text:

2011 2012 2010 Balance sheet-partial Current assets: 60,000 $ 50,000 $ 60,000 Cash... Short-term investments 155,000 155,000 240,000 320,000 120,000 Receivables, net 300,000 355,000 260,000 320,000 Inventories Prepaid expenses Total current assets 75,000 $ 945,000 $ 790,000 $ 815,000 $ 590,000 $ 580,000 $ 680,000 25,000 55,000 Total current liabilities Income statement-partial Sales revenue (all on account)... $5,830,000 $5,110,000 $4,210,000