Financial accounting 16th Edition by Jan Williams,Susan Haka,Mark Bettner ,Joseph Carcello

Exercise 28

Shown below are selected financial data for Another World and Imports, Inc., at the end of the current year:

Assume that the year-end balances shown for accounts receivable and for inventory approximate the average balances of these items throughout the year.
Instructions
a.or each of the two companies, compute the following:
1.orking capital.
2.urrent ratio.
3.uick ratio.
4.umber of times inventory turned over during the year and the average number of days required to turn over inventory (round computation to the nearest day).
5.umber of times accounts receivable turned over during the year and the average number of days required to collect accounts receivable (round computation to the nearest day).
6.perating cycle.
b.rom the viewpoint of a short-term creditor, comment on the quality of each company's working capital.o which company would you prefer to sell $25,000 in merchandise on a 30-day open account