Homework: Financial Ratios
Given the information below, for 2013 and 2014, calculate the current ratio, quick ratio, accounts receivable turnover, and collection period. Include both your calculations and a brief explanation (3-4 sentences) to explain the ratio and what the resulting change from 2013 to 2014 might mean for the company.
Note: The term income from operations is equivalent to the term sales.
2014 2013
Cash-------------------------------------- $ 30,000 $ 20,000
Short term investment ---------------- 37,000 18,000
accounts receivable net -------------- 120,0000 140,000
inventory -------------------------------- 290,000 320,000
prepaid expenses ---------------------- 7,000 10,000
total assets ----------------------------- 600,000 750,000
total current liabilities ---------------- 220,000 200,000
long term note payable -------------- 150,000 185,000
income from operation -------------- 145,000 180,000
interest expenses ------------------- 22,000 26,000
9 years ago
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