Calculate the Current ratio financial ratios for XYZ Ltd

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Reference no: EM133005079

Question - XYZ Co Ltd had the following comparative current assets and current liabilities:

 

?30 June 2020

30 June 2019

Current assets

 

 

Cash

?$30,000

?$30,000

Marketable securities

? 40,000

?10,000

Accounts receivable

? 55,000

? 95,000

Inventory

? 110,000

? 90,000?

Prepaid expenses

? 35,000

? 20,000

Total current assets

?$270,000

?$245,000

Current liabilities

 

 

Accounts payable

?$120,000

?$110,000

??Salaries payable

?40,000

?30,000

Income tax payable

? 20,000

? 15,000?

Total current liabilities

$180,000?

$155,000

During 2020, credit sales and cost of goods sold were $450,000 and $250,000, respectively. Net cash provided by operating activities for 2020 was $134,000.

Required -

a) Calculate the following financial ratios for XYZ Ltd for the year of 30 June 2020.

Current ratio

Quick ratio

Receivables turnover

b) With reference to cash sufficiency ratios, discuss the role(s) that an entity's cash flow data can play in analysing the entity's financial performance.

Reference no: EM133005079

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