Reference no: EM131821248

Problem 1: Liquidity Analysis

The following selected information is taken from the financial statements of Arnn Company for its most recent year of operations:

Beginning balances:
Inventory	$200,000
Accounts receivable	300,000
Ending balances:
Inventory	$250,000
Accounts receivable	400,000
Cash	$100,000
Marketable securities (short-term)	200,000
Prepaid expenses	50,000
Accounts payable	175,000
Taxes payable	85,000
Wages payable	90,000
Short-term loans payable	50,000

During the year, Arnn had net sales of $2.45 million. The cost of goods sold was $1.3 million.

Required:

Note: Round all answers to two decimal places.

• Compute the current ratio.
• Compute the quick or acid-test ratio.
• Compute the accounts receivable turnover ratio.
• Compute the accounts receivable turnover in days.
• Compute the inventory turnover ratio.
• Compute the inventory turnover in days.