The comparative financial statements of O?Doherty?s Irish Grille for 2018, 2017, and 2016 include the following selected data:

Requirements

1. Compute these ratios for 2018 and 2017:

a. Quick ratio

b. Current ratio

c. Accounts receivable turnover (assume all sales are credit sales)

d. Receivable collection period (assume all sales are credit sales and use 365 days)

2. Write a memo explaining to the company owner which ratios improved from 2017 to 2018, which ratios deteriorated, and which items in the financial statements changed and caused changes in some ratios. Discuss whether this change conveys a favorable or an unfavorable impression about the company.

Transcribed Image Text:

2018 2017 2016 Balance Sheet Current Assets: $ 6,700 $ 8,000 $ 6,100 Cash Short-term Investments 13,300 31,200 25,000 32,400 12,800 21,600 Receivables, Net Inventory Prepaid Expenses 43,400 42,600 31,500 2,000 2,700 4,700 76,700 Total Current Assets 96,600 110,700 $ 84,000 $ 86,000 $ 63,500 Total Current Liabilities Income Statement $524,700 $505,300 $424,900 275,100 Sales Revenue 241,800 Cost of Goods Sold 265,000