Sheet1
Case 3
The following selected information is taken from the financial statements of Arnn Company for its most recent year of operations:
Beginning balances:
Inventory $ 200,000
Accounts Receivable 300,000
Ending Balances:
Inventory $ 250,000
Accounts Receivable 400,000
Cash 100,000
Marketable securities (short-term) 200,000
Prepaid Expenses 50,000
Accounts Payable 175,000
Taxes Payable 85,000
Wages Payable 90,000
Short-term Loans Payable 50,000
During the year, Arnn had:
Net Sales $ 2,450,000
COGS 1,300,000
Example ratio calculation:
1. Compute the times interest earned ratio.
Interest Expense $ 1,500.00
Income Before Taxes $ 400,000.00
Calculation label: =Income Before Taxes+Interest Expense
Calculation: $ 401,500.00
Calculation label: =Interest Expense
Calculation: $ 1,500.00
Answer label: =(Income Before Taxes+Interest Expense)/Interest Expense
Answer: 267.67
Required:
Note: Round all answers to two decimal places and format as either a number or dollar amount. To receive full points, you must show your work and label the amounts used in your calculations.
Use an apostrophe ‘ at the beginning of a calculation label to keep it from showing a #NAME? error. This shows the text you have written (see my calculation label in the example above).
1. Compute the current ratio.
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2. Compute the Quick or Acid-Test Ratio:
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3. Compute the Accounts Receivable Turnover:
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4. Compute the Accounts Receivable Turnover in Days: