Question

Quick assets=50    A/P= 10   taxes payable=10   long term bond payable=30 Find the quick ratio. Inventory( Jan...

  1. Quick assets=50    A/P= 10   taxes payable=10   long term bond payable=30

Find the quick ratio.

  1. Inventory( Jan 1)=80      Inventory (Dec 31)=60       COGS=280

Find inventory turnover

  1. Inventory turnover=20 . Find days’ sales in inventory ( use 360 days)
  2. Average assets= 100      sales =70   , net income=8, gross profit=10. Find return on assets.
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Homework Answers

Answer #1

QUICK RATIO = QUICK ASSETS / CURRENT LIABILITIES

TAX PAYABLE = CURRENT LIABILITES

A/P = CURRENT LIABILITES

LONG TERM BOND= NON CURRENT LIABILITIES

TOTAL CURRENT LIABILITES = 10+10 = 20

QUICK RATIO = 50/20

= 2.5 (ANSWER)

.2

INVENTORY TURNOVER RATIO = COGS / AVERAGE INVENTORY

AVERAGE INVENTORY = (BEGINING INVENTORY + CLOSING INVNTRY ) / 2

(80+60) / 2

= 70

INVENTORY TURNOVER RATIO = 280 / 70

= 4 (ANSWER)

3.

DAYS INVENTORY = 360 / INVENTRY TURNOVER

= 360 / 20

= 18 DAYS (ANSWER)

4.

RETURN ON ASSETS = NET INCOME / AVERAGE TOTAL ASSETS

AVERAGE TOTAL ASSETS = 100

= 8 / 100

= 8%

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