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Question 2 Selected financial statement data for Mure Company are presented below. December 31, 2017 December...

Question 2

Selected financial statement data for Mure Company are presented below.
December 31, 2017 December 31, 2016
Cash $ 40,000 $30,000
Short-term investments 20,000 18,000
Accounts receivable (net) 100,000 90,000
Inventory 80,000 60,000
Total current liabilities 100,000 90,000


During 2017, net sales were $950,000, and cost of goods sold was $770,000.
Compute the current ratio at December 31, 2017. (Round answer to 1 decimal place, e.g. 2.1:1)
Current ratio :1

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Compute the acid-test ratio at December 31, 2017. (Round answer to 2 decimal places, e.g. 2.15:1)
Acid-test ratio :1

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Compute the accounts receivable turnover at December 31, 2017.
Accounts receivable turnover times

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Compute the inventory turnover at December 31, 2017.
Inventory turnover. times

Homework Answers

Answer #1
Total Current assets
Cash 40,000
Short term investment 20000
Accounts receivable 1,00,000
Inventories 80000
Total current assets 2,40,000
Divide: Current liabilities 100000
Current ratio of 2017 2.4
Acid test Ratio
Total Liquid assets
Cash 40,000
Short term investment 20000
Accounts receivable 1,00,000
Total liquid assets 160000
Divide: Current liabilities 100000
Acid test ratio 1.6
Average accounts receivable = (100000+90000) /2 = 95000
Accounts receivable turnover:
Net sales 950000
Divide: Average accounts recievables 95000
Accounts receivable turnover 10
Average inventory =( 80000+60000)/2 = 70000
Inventory turnover ratio:
Cost of good ssold 770000
Divide: Average inventory 70000
Inventory turnover ratio 11
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