Time remaining:
solve the following: round to the nearest hundreth

label Mathematics
account_circle Unassigned
schedule 1 Day
account_balance_wallet $5

 solve the following:

current ratio acid test

avg day's collection

asset turnover 

profit margin

Current assets $18,000 A/R 3,000, C/L 16,000 Inventory 2,000, Net sales 41,000 total assets 29,000 net income 6,000

Apr 13th, 2015

Current ratio = Current assets/Current liabilities

                     = $18,000/$16,000

                     = 1.125

Acid test = (Current assets - Inventory)/Current liabilities

               = ($18,000 - $2,000)/$16,000

               = $16,000/$16,000

               = 1

In acid test, we take current assets minus inventory because value of cash and other current assets are not provided.

Average day's collection = (Days * Accounts Receivable)/Sales

                                         = (365 * $3,000)/$41,000

                                         = 26.71

Assets turnover = Sales/Total Assets

                           = $41,000/$29,000

                           = 1.41

Profit Margin = Net income/Net sales 

                     = $6,000/$41,000

                     = 0.1463 or                    14.63%

                   

Apr 14th, 2015

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