Hints For each ratio presented below, indicate whether the current year is Bette

Question

Hints For each ratio presented below, indicate whether the current year is Better of Worse than the prior year Current Prior Ratio Accounts Receivable Acid Test Ratio Current Ratio Inventory Turnover Number of Days Sales in Inventory Number of Days' Sales in Receivables Number of Times Interest Charges Year 12.0 1.2 2.5 5.6 52 70 Year 12.8 2.3 2.3 5.7 51 79 5.2 10.2 12% 12% 3.7 Earned Price- Earnings Ratio Rate Earned on Stockholders Equity Rate Earned on Total Assets 10.0 9% 13% Is the Accounts Receivable Turnover for the Current Year better or worse than the Prior Year? OA. Better OB. Worse Hints

Explanation / Answer

Answer)

Accounts receivable ratio is worse in current period than prior period.

The reason is the low the accounts receivables ratio the low the collections from debtors.

Acid test ratio is worse compared to prior period.

Acid test ratio the high the better. It is due to the high the acid test ration the high t the current assets over current liabilities.

The rate earned on total assets is worse compared to prior period.

The reason is the return on total assets indicated that the entity is unable to earn as much as return on total assets compared to prior period.

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