Assignment #5 (graded) 3.

33%

1.) Working Capital Ratio

Item Amount
Prepaid interest 54,500
Short term investments 60,500
Prepaid advertising 117,000
Total current assets 232,000

Unearned revenue 174,500

Rent payable 199,500
Interest payable 163,500
Total current liabilities 537,500

Current assets – current liabilities = working capital

232,000 – 537500 = -305,500

2.) Current Ratio

 Item Amount
Prepaid rent 115,500
Accounts receivable 14,900
Merchandise Inventory 192,500
Prepaid Advertising 182,000
Total current assets 504,900

Unearned revenue 177,000

Salaries Payable 197,000
Total current liabilities 374,000

Current Asset 504,900

Current Liabilities 374,000
Current ratio 1.35

3.) Acid-test Ratio

 Item Amount
Cash 146,000
Short-term investments 22,000
Accounts receivable 156,500
Prepaid rent 133,000
Total current assets 457,500

Salaries payable 63,000

Accounts payable 167,500
Interest payable 171,500
Rent payable 162,000
Mortgage payable 153,500
Total current liabilities 717,500

Current Asset less prepaid rent 324,500

Current liabilities 717,500
Acid Test Ratio 0.45

4.) Accounts Receivable Collection Period

Item Amount (2022)

Ave. Accounts Receivable 17,000
/Sales 106,000
0.160 x 365 days
Accounts Receivable Collection Period 58.54
5.) Number of days Sales in Inventory Ratio

Item Amount (2022)

Ave. Merchandise Inventory 21,500
/Cost of Goods Sold 47,500
0.452 x 365 days
Number of days sales in inventory ratio 165.21