Reference no: EM132744695
For each of the following scenarios, compute the financial ratios and interpret their meanings.
Problem a. Based on the following information related to Trust Company, compute its acid-test ratio and interpret its meaning.
Current Assets
Inventories 220,000
Accounts receivable 122,000
Prepaid expenses 60,000
Short-term investments 150,000
Cash $ 8,000
Total current assets $560,000
Total current liabilities are $200,000.
Problem b. During 2019, Quiet Incorporated purchased $3,200,000 of inventory. The cost of goods sold for 2019 was $3,600,000 and the ending inventory at December 31, 2019, was $400,000. Compute its inventory turnover for 2019 and interpret its meaning.
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: 2019 was $3,600,000 and the ending inventory at December 31, 2019, was $400,000. Compute its inventory turnover for 2019 and interpret its meaning.
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