Question 13 (Total 10 marks) Question 13a. Birch Lid had the following comparative current assets and current liabilities: 31 Dec 2020 31 Dec 2019 Current assets Cash $ 30,000 $ 30,000 Marketable securities 40,000 10,000 Accounts receivable 55,000 95,000 Inventory 110,000 90,000 Prepaid expenses 35.000 20,000 Total current assets $270.000 $245,000 Current liabilities Accounts payable $120,000 $1 10,000 Salaries payable 40,000 30,000 Current tax liabilities 20,000 15.000 Total current liabilities $180,000 $155.000 During 2020, credit sales and cost of sales were $450,000 and $250,000, respectively. Net cash provided by operating activities for 2020 was $134,000. Required: Calculate the following liquidity measures for 2020: a. Current ratio b. Quick ratio c. Current cash debt coverage d. Receivables turnover e. Inventory turnover (5 marks) (Formulae are provided on the last page of the exam paper.) Question 13b. The liquidity measures for 2019 for Birch Lid were: Current ratio = 1.58:1 Receivables turnover = 8 times Quick ratio = 0.87:1 Inventory turnover = 5 times. Current cash debt coverage = 1.2 times Required: Based on the liquidity ratios for 2019 (given above) and for 2020 (calculated in Question 13a), for each ratio: 1) discuss whether the ratio for 2020 has improved or declined, and 2) explain whether this signals good or bad news about the company and briefly explain why