Calculate the following ratios (to two decimal places) for 2020 & 2019:

a) current ratio (4 marks)



b) quick (acid-test) ratio (5 marks)



Calculate the following ratios (to two decimal places) for 2020:

c) inventory turnover (2 marks)
d) accounts receivable turnover(2 marks)

e) gross profit percentage(2 marks)

f) profit margin(1 marks)

and then

g) Comment on the liquidity of the business (refer to ratios calculated and only use relevant ratios to comment on the overall liquidity)

 

Transcribed Image Text:

The financial statements of Kit's Café include the following items: 2020 2019 $ $ 56,800 44,800 66,400 22,400 155,200 109,600 210,400 204,800 19,200 38,400 508,000 420,000 318,400 220,400 Balance Sheet Cash Short term investments Net accounts receivable Inventory Prepaid expenses Total current assets Total current liabilities Income Statement Net credit sales Cost of goods sold Net profit/Net income Credit policy: Invoices payable within 30 days 1,113,600 760,600 100,000 The financial statements of Kit's Café include the following items: 2020 2019 $ $ 56,800 44,800 66,400 22,400 155,200 109,600 210,400 204,800 19,200 38,400 508,000 420,000 318,400 220,400 Balance Sheet Cash Short term investments Net accounts receivable Inventory Prepaid expenses Total current assets Total current liabilities Income Statement Net credit sales Cost of goods sold Net profit/Net income Credit policy: Invoices payable within 30 days 1,113,600 760,600 100,000

Answer rating: 100% (QA)

a Current Ratio Current Asset Current Liabilities 2020 508000 318400 1601 2019 420000 220400 1911 b ... View the full answer