Reference no: EM132826207

Problem 1 - Liquidity Ratios - You have been asked to evaluate the liquidity position of Burgos Fitness Center. The following data are from Burgos' annual report:

Cash 130,000

Trading Investments 60,000

Accounts Receivable:

January 1 156,000

December 31 214,000

Merchandise Inventory

January 1 252,000

December 31 214,000

Current Liabilities 240,000

Cost of Goods Sold 3,000,000

Credit Sales 5,000,000

Required - Using the data, calculate Burgos'

1. Working capital

2. Current ratio

3. Quick ratio

4. Inventory turnover

5. Accounts receivable turnover

6. Average age of receivables

Please provide a solution.

Problem 2 - Solvency Ratios - The president of Rodrigez, Inc., has asked you to gather some statistics about his corporation's solvency. You have compiled the following data:

Profit 900,000

Income Tax Rate 35%

Interest Expense 100,000

Total Liabilities 2,048,000

Total Equity 4,352,000

Using these data, calculate:

1. Times interest earned ratio

2. Debit ratio

3. Equity ratio

Please provide a solution.