Question: Web Structure Inc. calculated the ratios shown below for 2020 and 2019: Required: 1. & 2. Identify whether the change in the ratios from
Web Structure Inc. calculated the ratios shown below for 2020 and 2019: Required: 1. & 2. Identify whether the change in the ratios from 2019 to 2020 is favourable (F) or unfavourable (U) and assess whether the 2020 ratios are favourable or unfavourable in comparison to the industry averages. (Select the option "Neither For U" if the option Favorable or Unfavorable is not applicable.) Industry 2020 2019 Trend Average Comparison to Industry Average Current ratio Quick ration 1.14:1 1.03 1 1.6:1 1.05 1 0.901 1.1:1 Accounts receivable turnover 16 23 16 times. Days' sales uncollected 41 37 Inventory turnover 7.2 7.6 Days' sales in inventory 55 43 Total asset turnover 3.8 2.4 Debt ratio 73 53 Times interest earned 2.8 9.3 21 days 5 times 70 days 2.3 times 35% 50 times Profit margin 18.5 21.0 14 % Gross profit ratio 15.0 13.5 18 %
Step by Step Solution
There are 3 Steps involved in it
Get step-by-step solutions from verified subject matter experts
