Question

Angela Adams was considering investing in a business. She used the following statement in analyzing the Tic Tock Clock Shop. Provide the following information for Angela Adams' consideration. When the ratio is less than 1, round the ratio to three decimal places; otherwise, round to one decimal place.

Tic Tock Clock Shop
	Comparative Balance Sheet
	As of December 31, 2015 and 2014
	2015		2014
	Amount		Amount
ASSETS
Current assets:
Cash	$137,200		$131,600
Accounts receivable	88,000		86,200
Merchandise inventory	244,000		229,900
Total current assets	$469,200		$447,700
Fixed assets:
Building improvements	$72,400		$64,600
Equipment	136,000		136,600
Total fixed assets	$208,400		$201,200
TOTAL ASSETS	$677,600		$648,900
LIABILITIES
Current liabilities:
Salaries payable	$54,700		$78,300
Accounts payable	110,000		120,000
Total current liabilities	$164,700		$198,300
Long-term liabilities:
Note payable	$127,300		$131,900
Total liabilities	$292,000		$330,200
Owner's equity:
J. B. Tinker, capital	385,600		318,700
TOTAL LIABILITIES AND OWNER'S EQUITY	$677,600		$648,900

	Tic Tock Clock Shop
	Comparative Income Statement
	For Years Ended December 31, 2015 and 2014
	2015		2014
NET SALES	$819,600		$856,400
Cost of goods sold:
Merchandise inventory, January 1	$229,900		$222,800
Purchases	575,100		574,300
Merchandise available for sale	$805,000		$797,100
Merchandise inventory, December 31	244,000		229,900
Cost of goods sold	$561,000		$567,200
Gross profit on sales	$258,600		$289,200
Expenses:
Selling	$73,500		$69,800
Other	27,900		31,500
Total expenses	$101,400		$101,300
NET INCOME	$157,200		$187,900

a. Working capital ratio
b. Acid-test ratio
c. Ratio of accounts receivable to net sales
d. Inventory turnover	times	times
e. Ratio of net income to net sales	%	%
f. Rate of return on investment	%	%

Answer 1