Problem 9-16 A firm’s balance sheets for the last two years are as follows: YEAR 20X1 Assets Liabilities and Equity Cash $ 5,000 Accounts payable $ 12,000 Accruals 7,000 Accounts receivable 16,000 Current bank note 12,000 Inventory 23,000 Long-term debt 9,000 Plant and equipment 36,000 Common stock 19,000 Retained earnings 21,000 $ 80,000 $ 80,000 YEAR 20X2 Assets Liabilities and Equity Cash $ 4,000 Accounts payable $ 12,000 Accruals 13,000 Accounts receivable 17,000 Current bank note 8,000 Inventory 23,000 Long-term debt 4,000 Plant and equipment 36,000 Common stock 20,000 Retained earnings 23,000 $ 80,000 $ 80,000 Sales in 20X1 were $205,000. Sales in 20X2 were $205,000. 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 -Select-deterioratedimprovedremained the sameItem 5 . Without doing a calculation, has days sales outstanding (receivables turnover) improved? Days sale outstanding has -Select-deterioratedimprovedremained the sameItem 6 . Without doing a calculation, has inventory turnover deteriorated? Inventory turnover has -Select-deterioratedimprovedremained the sameItem 7 . If the firm earned $7,000 during 20X2, what proportion of those earnings were distributed? Round your answer to two decimal places. ___%

Corporate Financial Accounting

14th Edition

ISBN:9781305653535

Author:Carl Warren, James M. Reeve, Jonathan Duchac

Publisher:Carl Warren, James M. Reeve, Jonathan Duchac

Chapter14: Financial Statement Analysis

Section: Chapter Questions

Problem 14.1BE: Horizontal analysis The comparative accounts payable and long-term debt balances for a company...

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Problem 9-16

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

YEAR 20X1
Assets		Liabilities and Equity
Cash	$	5,000	Accounts payable	$	12,000
			Accruals		7,000
Accounts receivable		16,000	Current bank note		12,000
Inventory		23,000	Long-term debt		9,000
Plant and equipment		36,000	Common stock		19,000
			Retained earnings		21,000
	$	80,000		$	80,000

YEAR 20X2
Assets		Liabilities and Equity
Cash	$	4,000	Accounts payable	$	12,000
			Accruals		13,000
Accounts receivable		17,000	Current bank note		8,000
Inventory		23,000	Long-term debt		4,000
Plant and equipment		36,000	Common stock		20,000
			Retained earnings		23,000
	$	80,000		$	80,000

Sales in 20X1 were $205,000. Sales in 20X2 were $205,000.

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 -Select-deterioratedimprovedremained the sameItem 5 .

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

Days sale outstanding has -Select-deterioratedimprovedremained the sameItem 6 .

Without doing a calculation, has inventory turnover deteriorated?

Inventory turnover has -Select-deterioratedimprovedremained the sameItem 7 .

If the firm earned $7,000 during 20X2, what proportion of those earnings were distributed? Round your answer to two decimal places. ___%

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