ED-20 Computing key ratios

ED-20 Computing key ratios

ED-20  The financial statements of Victor’s Natural Foods include the following items

Current Year                Balance Sheet:

Preceding Year

Cash                                        $ 15,000                      $ 20,000
Short-term Investments                        11,000                         27,000
Net Accounts Receivables       54,000                         73,000
Merchandise Inventory                        77,000                         69,000
Prepaid Expenses                     15,000                         9,000
Total Current Assets                172,000                                   198,000
Total Current Liabilities                       133,000                                   93,000

Income Statement:
Net Credit Sales           $ 462,000
Cost of Goods Sold     315,000

Compute the following ratios for the current year:
a. Current ratio                                                 e. Days’ sales in inventory
b. Cash ratio                                                    f. Days’ sales in receivables
c. Acid-test ratio                                              g. Gross profit percentage
d. Inventory turnover