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3 years ago

1. Compute the current ratio and acid-test ratio for each of the following separate cases:

Business

1 answer:

Rina8888 [55]3 years ago

6 0

Answer:

Current Ratio: 2.49; 2.7; 1.75

Acid test ratio: 1.32; 0.64; 0.65

Explanation:

Current ratio

For Camaro:

= Current assets ÷ Current liabilities

= $ 5,915 ÷ $2,380

= 2.49

For GTO:

= Current assets ÷ Current liabilities

= $3,780 ÷ $1,400

= 2.7

For Torino:

= Current assets ÷ Current liabilities

= $6,900 ÷ $3,950

= 1.75

Acid test ratio:

For Camaro:

= (Current assets - Inventory - Prepaid expense) ÷ Current liabilities

= ($5,915 - $2,375 - $400) ÷ $2,380

= $3,140 ÷ $2,380

= 1.32

For GTO:

= (Current assets - Inventory - Prepaid expense) ÷ Current liabilities

= ($3,780 - $2,180 - $700) ÷ $1,400

= $900 ÷ $1,400

= 0.64

For Torino:

= (Current assets - Inventory - Prepaid expense) ÷ Current liabilities

= ($6,900 - 3,450 - $900) ÷ $3,950

= $2,550 ÷ $3,950

= 0.65

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Answer:

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For the month ended May 31, 2016

Sales $10,800,000

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Beginning inventory -

Cost of goods manufactured $9,600,000

Ending Inventory $960,000

Cost of goods sold $8,640,000

Gross margin $2,160,000

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Sales $10,800,000

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Ending Inventory $928,000

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Contribution margin $1,368,000

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Fixed selling and administrative $180,000

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Total fixed cost $500,000

Income from operation $868,000

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