QUESTION 11

1. Suppose the average quick ratio for Halal Cosmetics Ltd as at December 31, 2016 was 1.25:1.00.How much was the working capital for Halal Cosmetics at at December 31, 2016?

a, $4,000

b, There is insufficient data to determine the correct response.

c, $4,170

d,

$5,000

HALAL COSMETICS LTD BALANCE SHEET AS AT DEC 31, 2015 ASSETS LIABILITIES Cash $20,000 Accounts Payable $20,000 Accounts Receivables 10,000 Charge Card (Note 1) 5,000 Inventory 55,000 Shareholder's Equity 160,000 Fixed Assets 100,000 Total Assets $185,000 Total Liabilities & Shareholders' Equity $185,000 Note 1: A charge card, unlike a credit card, must be paid in full each month.HALAL COSMETICS LTD INCOME STATEMENT AS AT DEC 31, 2015 Sales $850,000 Cost of Goods Sold 500,000 Gross Profit 350,000 Operating Expenses 150,000 Net Profit** $200,000 ** Before income taxFormulae for Financial Ratio Analysis Current Ratio = Current Asset / Current Liabilities . Quick Ratio = Quick Assets / Current Liabilities . Working Capital = Current Asset - Current Liabilities . Gross Profit Margin (Expressed as %) = Gross Sales / Sales . Profit Margin (Expressed as %) = Net Income / Sales Average Collection Period (# Days) = (Accounts Receivables * 365) / Credit Sales . Average Inventory Period (# Days) = (Average Inventory * 365) / Cost of Goods Sold Average Inventory = (Beginning Inventory + Ending Inventory) / 2 . Debt to Equity = Total Liabilities / Shareholders' Equity