Ratios: -- Questions 59-62 Elizabeth’s Corp.\'s balance sheet accounts as of Dec
ID: 2599675 • Letter: R
Question
Ratios:--Questions 59-62 Elizabeth’s Corp.'s balance sheet accounts as of December 31, 2014 and 2013 and information relating to 2014 activities are presented below.
2014 2013
Assets
Cash $ 600,000 $ 200,000
Short-term investments 600,000 0
Accounts receivable 1,600,000 1,150,000
Allowance for doubtful accounts (100,000) (50,000)
Inventory 800,000 1,200,000
Plant assets (Net) 5,500,000 5,000,000
Total assets $9,000,000 $7,500,000
Liabilities and Stockholders' Equity
Accounts payable $2,000,000 $1,700,000
Accrued Expenses 800,000 450,000
Common stock, $10 par 500,000 500,000
Additional paid-in capital 2,500,000 2,000,000
Retained earnings 3,200,000 2,850,000
Total liabilities and stockholders' equity $9,500,000 $7,500,000
Sales (All sales are on credit) $5,850,000
Cost of goods sold 3,000,000
Expenses 1,850,000
Net income $ 1,000,000
All Ratios are for the year 2014
59. Inventory Turnover ratio?
a. 3.90
b. 1.82
c. 3.75
d. 3.00
e. 4.50
60. Accounts Receivable Turnover ratio?
a.
b.
c.
d.
e.
61. How many days on the average does it take to collect the total amount of accounts receivable? (please round)
a.
b.
c.
d.
e.
62. Quick (Acid Test) ratio?
a. .96
b. .60
c. .89
d. 1.04
e. None of the above
Explanation / Answer
Requirement 59: Inventory Turnover Ratio: A Cost of Goods Sold 3000000 B Ending Inventory 800000 C Beginning Inventory 1200000 D Average Inventory (B+C)/2 1000000 E Inventory Turnover Ratio A/D 3.00 Correct Option is d) 3 Requirement 60: Accounts Recceivable Turnover Ratio: A Sales 5850000 B Ending Accounts Receivable 1600000 C Beginning Accounts Receivable 1150000 D Average Accounts Receivable (B+C)/2 1375000 E Accounts Recceivable Turnover Ratio A/D 4.25 Correct Answer is 4.25 Requirement 61: Average days to collect accounts receivable: A Number of days in a year 365 B Accounts Receivable Turnover 4.25 C Average days to collect accounts receivable A/B 85.88 Correct Answer is 85.88 days Requirement 62: A Quick Assets: Cash 600000 Short term Investments 600000 Accounts Receivable 1600000 Less: Allowance for doubtful accounts -100000 2700000 B Current Liabilities: Accounts Payable 2000000 Accrued Expenses 800000 2800000 C Quick Ratio A/B 0.96 Correct Option is a) 0.96
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