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Question Completion Status: Question 1 Global Company and Local Company are competitors in the same industry. Selected financial data from their 2020 statements follow Balance Sheet December 31, 2020 Local Company Global Company Cashi $ 255,000 Accounts receivable 490,000 Inventory 770,000 Investments 410,000 Intangibles 90,000 Property, plant, and equipment 1000,000 Total assets $2.965.000 Accounts payable $505,000 Bonds payable 1,240,000 Preferred stock, $1 par 100,000 Common stock, $10 par 850,000 Retained earnings. 310,000 $2.965,000 $ 40,000 145,000 220,000 130,000 43,000 550.000 $1.078.000 $190,000 310,000 160,000 310,000 148,000 $1.078.000 Income Statement For the Year Ended December 31, 2020 1 Total liabilities and capital Question Completion Status Industry Averages: Current Ratio 2:1 Quick Ratio 08:1 Income Matement For the Year Ended December 31.2020 Global Company Local Company $3,465,000 $15,400,000 2392,500 11,275,000 750,000 3.190.000 33,000 176.000 148.000 357.500 141,900 5.401.500 Sales Cost of goods sold Selling and administrative expenses Interest expense Income taxes Net income Days Revenues Held in Cash 3 days Days Accounts Receivable 20 days Days Inventory 38 days. Required a. Compute the following ratios for each company: [5 marks) 1. Current Ratio. 2. Quick Ratio. 3. Days Revenues Held in Cash. www Lipot Sta Required a. Compute the following ratios for each company [5 marks] 1. Current Ratio 2. Quick Ratio 3. Days Revenues Held in Cash. 4. Days Accounts Receivable. 5. Days Inventory a. Answer (Show your calculation below); Item Local Company Global Company 1. 5. b. Which company has the better short-term liquidity position? Explain your answer based on the industry average. 2. 3. 4. [2 marks] c. In a period of falling prices, how would the following ratios be affected by the accounting decision to select LIFO, rather than FIFO, for inventury valuation? Use I for increase, D for decrease, and N for no change. [2 marks] Ratio LIFO Current ratio Gross margin Interest coverage ratio Debt-to-equity ratio For the toolbar, press ALT-F10 (PC) or ALT+FN-F10 (Mac) B IVS Paragraph V Arial 10pt 2 I. XO 19 52 50 EB ZAO 3E OWOWOS POWERED EN TINY X X XO (0) 88 P # ST - +] Question Completion Status: Question 1 Global Company and Local Company are competitors in the same industry. Selected financial data from their 2020 statements follow Balance Sheet December 31, 2020 Local Company Global Company Cashi $ 255,000 Accounts receivable 490,000 Inventory 770,000 Investments 410,000 Intangibles 90,000 Property, plant, and equipment 1000,000 Total assets $2.965.000 Accounts payable $505,000 Bonds payable 1,240,000 Preferred stock, $1 par 100,000 Common stock, $10 par 850,000 Retained earnings. 310,000 $2.965,000 $ 40,000 145,000 220,000 130,000 43,000 550.000 $1.078.000 $190,000 310,000 160,000 310,000 148,000 $1.078.000 Income Statement For the Year Ended December 31, 2020 1 Total liabilities and capital Question Completion Status Industry Averages: Current Ratio 2:1 Quick Ratio 08:1 Income Matement For the Year Ended December 31.2020 Global Company Local Company $3,465,000 $15,400,000 2392,500 11,275,000 750,000 3.190.000 33,000 176.000 148.000 357.500 141,900 5.401.500 Sales Cost of goods sold Selling and administrative expenses Interest expense Income taxes Net income Days Revenues Held in Cash 3 days Days Accounts Receivable 20 days Days Inventory 38 days. Required a. Compute the following ratios for each company: [5 marks) 1. Current Ratio. 2. Quick Ratio. 3. Days Revenues Held in Cash. www Lipot Sta Required a. Compute the following ratios for each company [5 marks] 1. Current Ratio 2. Quick Ratio 3. Days Revenues Held in Cash. 4. Days Accounts Receivable. 5. Days Inventory a. Answer (Show your calculation below); Item Local Company Global Company 1. 5. b. Which company has the better short-term liquidity position? Explain your answer based on the industry average. 2. 3. 4. [2 marks] c. In a period of falling prices, how would the following ratios be affected by the accounting decision to select LIFO, rather than FIFO, for inventury valuation? Use I for increase, D for decrease, and N for no change. [2 marks] Ratio LIFO Current ratio Gross margin Interest coverage ratio Debt-to-equity ratio For the toolbar, press ALT-F10 (PC) or ALT+FN-F10 (Mac) B IVS Paragraph V Arial 10pt 2 I. XO 19 52 50 EB ZAO 3E OWOWOS POWERED EN TINY X X XO (0) 88 P # ST - +]