Reference no: EM13490152

The following are Lozier's 2010 and 2011 balance sheets and income statements for the years ended December 31, 2010 and December 31, 2011, respectively.

 

	2010		2011
Cash	$  200,000		$  325,000
Accounts Receivable	400,000		450,000
Inventory	400,000		325,000
Intangible Assets	60,000		54,000
Total Assets	$1,060,000		$1,154,000
Accounts Payable	$   396,000		$   420,000
Short-term Notes Payable	100,000		100,000
Common Stock	3,000		3,000
Retained Earnings	564,000		636,000
Total Liabilities and Owner's Equity	$1,063,000		$1,159,000
	2010		2011
Sales Revenue	$ 945,000		$1,190,000
Cost of Goods Sold	(400,000)		(500,000)
Advertising Expense	(20,000)		(25,000)
Office Supplies Expense	(10,000)		(13,000)
Interest Expense	(5,000)		(5,000)
Net Income	$   510,000		$   647,000

 

Required:

Using an Excel spreadsheet, calculate the following ratios for 2010 and 2011:

1.   Quick ratio

2.   Accounts receivable turnover ratio

3.   Average age of  receivables. Assume a 360-day calendar year.

4.   Inventory turnover ratio.

5.   Calculate the average age of Lozier's inventory for 2010 and 2011. Assume a 360-day calendar year.

6.   Given your calculations in parts 1-5, what conclusions might you draw about Lozier's business operations?