Score: 0 of 3 pts S8-13 (book/static) Silver Clothiers reported the following se

Question

Score: 0 of 3 pts S8-13 (book/static) Silver Clothiers reported the following selected items at April 30, 2018 (last year's-2017-amounts also given as needed) 7 of 7 (1 complete) HW Score: 0%, 0 of 25 pts Question Help Click the icon to view the financial data.) Compute Silver's (a) acid-test ratio, (b) accounts receivable turnover ratio, and (c) days' sales in receivables for the year ending April 30, 2018. Evaluate each ratio value as strong or weak. Silver sells on terms of net 30. (Round days' sales in receivables to a whole number.) (a) Compute Silver's acid-test ratio. (Round your final answer to two decimal places. Abbreviation used: Avg-Average; Invest- Investment, Liab.-Liabilities; Merch. Merchandise; Receiv. - Receivable; Rev.Revenue.) ts Receiv 11,000 Short-term Invest. Other CrLab.Acid-test ratio I$ 516,000 Cash 673720 148,000 1.61

Explanation / Answer

Answer to Part a)

Acid-Test Ratio = (Cash + Accounts Receivable, April 30, 2018 + Short Term Investments + Other Current Assets) / Total Current Liabilities
Total Current Liabilities = Accounts Payable + Other Current Liabilities
Total Current Liabilities = $328,000 + $188,000 = $516,000

Acid-Test Ratio = (573,720 + 11,000 + 148,000 + 100,000) / 516,000
Acid-Test Ratio = 832,720 / 516,000
Acid-Test Ratio = 1.61

Answer to Part b)

Accounts Receivable Turnover Ratio = Net Credit Revenue / Average Accounts Receivable
Average Accounts Receivable = ($11,000 + $165,000) / 2
Average Accounts Receivable = $88,000

Accounts Receivable Turnover Ratio = 3,212,000 / 88,000
Accounts Receivable Turnover Ratio = 36.50

Answer to Part c)

Days’ Sales in Receivable = 365 / Accounts Receivable Turnover Ratio
Days’ Sales in Receivable = 365 / 36.50
Days’ Sales in Receivable = 10 days

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