175. The following information refers to Percy’s Records and its competitors in the music store business.
Percy’s Records……………2.00.95
Jewel CDs……... 1.51.00
Rudy’s Raps…..1.81.20
Marvin’s Jazz…………1.90.80
Industry Average…………2.01.00
Required:
Comment on the relative liquidity positions of these companies.
176. A company reported the following year-end information:
Short-term investments………………………...12,000
Accounts receivable…………………………....54,000
Inventory………………………………..……...325,000
Prepaid expenses……………………………….17,500
Accounts payable………………………..……..106,500
Other current payables…………………………25,000
Required:
1. Explain the purpose of the acid-test ratio.
2. Calculate the acid-test ratio for this company.
3. What does the acid-test ratio reveal about this company?
177. Calculate the gross margin ratio for each of the following separate cases A through C:
Net sales……………$145,000 $623,500 $37,800
Cost of goods sold…83,600 269,200 13,230