The comparative financial statements of New World Piano Company for 2020, 2019, and 2018 included the following selected data:

Requirements
1. As a financial advisor to an investor in New World Piano Company, identify or calculate the information for 2020 and 2019 that would be relevant in determining the company's liquidity position, and specify how each piece of information is relevant to your decision.
2. Write a memo explaining to your client the results of your evaluation including recommendations that will help New World Piano Company improve its liquidity

Transcribed Image Text:

Balance sheet: Current assets Cash............ Short-term investments.. Receivables, net of allowance for uncollectible accounts of $7, $6, and $4, respectively. Inventories....... Prepaid expenses.. Total current assets. Total current liabilities.. Income statement: Net sales 2020 (in millions) 2019 2018 $ 67 $ 66 62 73 81 70 226 174 195 . 398 375 349 22 19 16 $ 786 $ 715 $ 692 $ 420 $ 405 $ 388 $2,071 $2,005 $1,965