the financial statements of for the kitchen include the following items 541588
P10-7A. Calculate and analyze financial ratios. (LO 3)
The financial statements of For the Kitchen include the following items.
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the financial statements of for the kitchen include the following items 541588
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At June 30, 2007 |
June 30, 2006 |
June 30, 2005 |
|
|
Balance sheet : |
|||
|
Cash |
$ 17,000 |
$ 12,000 |
$ 14,000 |
|
Investments(i n trading securities) |
10,000 |
16,000 |
20,000 |
|
Accounts receivable (net) |
54,000 |
50,000 |
48,000 |
|
Inventory |
75,000 |
70,000 |
73,000 |
|
Prepaid expenses |
16,000 |
12,000 |
10,000 |
|
Total current assets |
172,000 |
160,000 |
165,000 |
|
Total current liabilities |
$140,000 |
$ 90,000 |
$75,000 |
|
Income statement for the |
June 30, 2007 |
June 30 2006 |
|
|
Year ended |
$420,000 |
$380,000 |
|
|
Net credit sales |
250,000 |
225,000 |
|
|
Cost of goods sold |
Required
a. Compute the following ratios for the years ended June 30, 2007, and whenever possible for the year ended June 30, 2006. For each, indicate if the direction is favorable or unfavorable for the company.
1. Current ratio
2. Accounts receivable turnover
3. Inventory turnover ratio
4. Gross profit percentage
b. Suppose the industry average for similar retail stores for the current ratio is 1.7.
Does this information help you evaluate For the Kitchen’s liquidity?
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