A firm’s balance sheets for the last two years are as follows: YEAR 20X1Assets Liabilities and EquityCash$8,000 Accounts payable$15,000 Accruals 13,000Accounts receivable 9,000 Current bank note 14,000Inventory 20,000 Long-term debt 64,000Plant and equipment 103,000 Common stock 15,000 Retained earnings 19,000 $140,000 $140,000 YEAR 20X2Assets Liabilities and EquityCash$4,000 Accounts payable$10,000 Accruals 8,000Accounts receivable 13,000 Current bank note 14,000Inventory 20,000 Long-term debt 71,000Plant and equipment 103,000 Common stock 17,000 Retained earnings 20,000 $140,000 $140,000 Sales in 20X1 were $225,000. Sales in 20X2 were $225,000. Based solely on the current ratio and the quick ratio, has the firm’s liquidity position deteriorated or improved? Round your answers to two decimal places. Current ratios:20x1: 20x2: Quick ratios:20x1: 20x2: The firm’s liquidity position has . Without doing a calculation, has days sales outstanding (receivables turnover) improved? Days sale outstanding has . Without doing a calculation, has inventory turnover deteriorated? Inventory turnover has . If the firm earned $10,000 during 20X2, what proportion of those earnings were distributed? Round your answer to two decimal places. %

Current Ratio and Quiis Ratio are measure of short-term liquidity and solvency. Current Ratio is…

Answered: A firm’s balance sheets for the last…

Managerial Accounting: The Cornerstone of Business Decision-Making

7th Edition

ISBN:9781337115773

Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Chapter15: Financial Statement Analysis

Section: Chapter Questions

Problem 55E: Rebert Inc. showed the following balances for last year: Reberts net income for last year was...

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A firm’s balance sheets for the last two years are as follows:

YEAR 20X1
Assets		Liabilities and Equity
Cash	$	8,000	Accounts payable	$	15,000
			Accruals		13,000
Accounts receivable		9,000	Current bank note		14,000
Inventory		20,000	Long-term debt		64,000
Plant and equipment		103,000	Common stock		15,000
			Retained earnings		19,000
	$	140,000		$	140,000

YEAR 20X2
Assets		Liabilities and Equity
Cash	$	4,000	Accounts payable	$	10,000
			Accruals		8,000
Accounts receivable		13,000	Current bank note		14,000
Inventory		20,000	Long-term debt		71,000
Plant and equipment		103,000	Common stock		17,000
			Retained earnings		20,000
	$	140,000		$	140,000

Sales in 20X1 were $225,000. Sales in 20X2 were $225,000.

Based solely on the current ratio and the quick ratio, has the firm’s liquidity position deteriorated or improved? Round your answers to two decimal places.

Current ratios:

20x1:

20x2:

Quick ratios:

20x1:

20x2:

The firm’s liquidity position has .

Without doing a calculation, has days sales outstanding (receivables turnover) improved?

Days sale outstanding has .

Without doing a calculation, has inventory turnover deteriorated?

Inventory turnover has .

If the firm earned $10,000 during 20X2, what proportion of those earnings were distributed? Round your answer to two decimal places.

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