Big Game Inc. operates gaming stores across the country. Selected comparative financial statement data are shown below
Question:
Big Game Inc. operates gaming stores across the country. Selected comparative financial statement data are shown below
Instructions
a. Calculate the following liquidity ratios for 2024 and 2023.
1. Current ratio
2. Acid-test ratio
3. Receivables turnover
4. Collection period
5. Inventory turnover
6. Days sales in inventory
7. Operating cycle
b. Indicate whether each of the liquidity ratios calculated in part (a) is better or worse in 2024.
Current assets Cash BIG GAME INC. Balance Sheet (partial) December 31 (in millions) 2024 Short-term investments Accounts receivable Inventory Prepaid expenses Total current assets Total current liabilities Additional information: (in millions) Net credit sales Cost of goods sold $ 795 55 676 898 41 $2,465 $1,890 2024 $8,258 5,328 2023 $ 91 60 586 525 52 $1,314 $825 2023 $3,940 2,650 2022 $ 60 40 496 575 29 $1,200 $ 750
Step by Step Answer:
a b 1 Current ratio Worse 2 Acidtest ratio Worse 3 Receivables turnover Bette...View the full answer
Accounting Principles Volume 2
ISBN: 9781119786634
9th Canadian Edition
Authors: Jerry J. Weygandt, Donald E. Kieso, Paul D. Kimmel, Barbara Trenholm, Valerie Warren, Lori Novak
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Days sales outstanding (DSO) is a measure of the average number of days that it takes a company to collect payment for a sale. DSO is often determined on a monthly, quarterly, or annual basis. To compute DSO, divide the average accounts receivable during a given period by the total value of credit sales during the same period and multiply the result by the number of days in the period being measured.
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