Calculate the current ratio and acid test

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Reference no: EM132892633

Question - The following information is available for the Carter Co.

Cash: $45,000

Short-Term Investments: $82,000

Receivables: $105,000

Current Assets: $312,000

Current Liabilities: $123,000

Net Sales: $850,000

Cost of Goods Sold: $400,000

Net Income: $360,000

Beginning Inventory: $61,000

Ending Inventory: $56,000

Beginning Accounts Receivable: $124,000

Ending Accounts Receivable: $99,000

The following information is available for the Dalton Co.

Cash: $56,000

Short-Term Investments: $85,000

Receivables: $111,000

Current Assets: $302,000

Current Liabilities: $90,000

Net Sales: $750,000

Cost of Goods Sold: $323,000

Net Income: $400,000

Beginning Inventory: $89,000

Ending Inventory: $91,000

Beginning Accounts Receivable: $102,000

Ending Accounts Receivable: 94,000

Required -

1. For both companies calculate the current ratio, acid test, working capital, accounts receivable turnover, inventory turnover, and profit margin.

2. Which company is the better credit risk?

Reference no: EM132892633

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