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 2021 and 2020.

1. Current ratio 5. Inventory turnover

2. Acid-test ratio 6. Days sales in inventory

3. Receivables turnover 7. Operating cycle

4. Collection period

b. Indicate whether each of the liquidity ratios calculated in part (a) is better or worse in 2021.

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BIG GAME INC. Balance Sheet (partial) December 31 (in millions) 2021 2020 2019 Current assets $ 795 $ 60 $ 91 Cash Short-term investments 55 40 Accounts receivable 676 586 496 Inventory Prepaid expenses 898 525 575 41 52 29 $2,465 Total current assets $1,314 $1,200 $ 825 $ 750 Total current liabilities $1,890 Additional information: 2020 2021 (in millions) Net credit sales $8,258 $3,940 Cost of goods sold 5,328 2,650