The financial statements of Big City News, Inc., include the following items: Requirements 1. Using Exhibit 13-8

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The financial statements of Big City News, Inc., include the following items:

The financial statements of Big City News, Inc., include the

Requirements
1. Using Exhibit 13-8 as a model, compute the following ratios for 2014 and 2013:
a. Current ratio
b. Quick (acid-test) ratio
c. Inventory turnover and days€™ inventory outstanding (DIO)
d. Accounts receivable turnover
e. Days€™ sales in average receivables or days€™ sales outstanding (DSO)
f. Accounts payable turnover and days€™ payable outstanding (DPO). Use cost of goods sold in the formula for accounts payable turnover
g. Cash conversion cycle (in days) (When computing days, round your answer to the nearest whole number.)
2. Evaluate the company€™s liquidity and current debt-paying ability for 2014. Has it improved or deteriorated from 2013?
3. As a manager of this company, what would you try to improve nextyear?

Cash Conversion Cycle
Cash conversion cycle measures the total time a business takes to convert its cash on hand to produce, pay its suppliers, sell to its customers and collect cash from its customers. The process starts with purchasing of raw materials from suppliers,...
Financial Statements
Financial statements are the standardized formats to present the financial information related to a business or an organization for its users. Financial statements contain the historical information as well as current period’s financial...
Accounts Receivable
Accounts receivables are debts owed to your company, usually from sales on credit. Accounts receivable is business asset, the sum of the money owed to you by customers who haven’t paid.The standard procedure in business-to-business sales is that...
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Financial Accounting

ISBN: 978-0133427530

10th edition

Authors: Walter Harrison, Charles Horngren, William Thomas

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