### Compute the acid-test ratio

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Question - Computation of selected ratios.

The following data is given:

December 31,

2016                 2015

Cash                                                       \$ 68,000           \$ 50,000

Accounts receivable (net)                          70,000              60,000

Inventories                                              90,000               130,000

Plant assets (net)                                      383,000            325,000

Accounts payable                                      60,000              40,000

Salaries and wages payable                       10,000               5,000

Bonds payable                                          70,000              70,000

10% Preferred stock, \$40 par                     100,000             100,000

Common stock, \$10 par                             120,000             90,000

Paid-in capital                                           80,000               65,000

Retained earnings                                     170,000             175,000

Net credit sales                                         800,000

Cost of goods sold                                    600,000

Net income                                              80,000

Instructions - Compute the following ratios:

(a) Acid-test ratio at 12/31/16.

(b) Receivables turnover in 2016.

(c) Inventory turnover in 2016.

(d) Profit margin on sales in 2016.

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