Ratio Analysis Paper 6

1

Maydale Inc ’s financial statements show the following information:
Accounts receivable, end of Year1 $320,000
Credit sales for Year2 3,600,000
Accounts receivable, end of Year2 400,000
Maydale’s accounts receivable turnover ratio is .






2

Zubin Corporation experiences a decrease in sales and cost of goods sold, an increase in accounts receivable, and no change in inventory. If all else is held constant, what is the total effect of these changes on the receivables turnover and inventory ratios?
Inventory Turnover
Receivables Turnover






3

On its year-end financial statements, Caper Corporation showed sales of $3,000,000, net fixed assets of $1,130,000 and total assets of $2,000,000 The company’s fixed asset turnover is






4

Globetrade is a retailer that buys virtually all of its merchandise from manufacturers in a country experiencing significant inflation. Globetrade is considering changing its method of inventory costing from first-in, first-out (FIFO) to last-in, first-out (LIFO). What effect would the change from FIFO to LIFO have on Globetrade’s current ratio and inventory turnover ratio?






5

Lancaster, Inc., had net accounts receivable of $168,000 and $147,000 at the beginning and end of the year respectively The company’s net income for the year was $204,000 on $1,700,000 in total sales Cash sales were 6% of total sales Lancaster’s average accounts receivable turnover ratio for the year is






6

A corporation is able to reduce its days’ sales in inventory by adopting a more efficient inventory management system. Other things remaining the same, this would






7

A company changes its credit policy from 2/10 net 30 to 1/10 net 90. The most likely effect of this change is to






8

A corporation has a decrease in its operating cycle and a decrease in its cash cycle. All else remaining unchanged this would occur if the corporation’s






9

A debt to equity ratio is






10

The relationship of the total debt to the total equity of a corporation is a measure of






Result

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