Reference no: EM13825328
The comparative financial statements of New World Piano Company for 20X3, 20X2, and 20X1 included the following selected data:
Balance Sheet:
20X3
Current Assets:
cash $67
Short-term investments $93
Receivables, net allowance $206
Inventories $408
Prepaid expenses $32
Total current assets $806
Total current Liabilities $440
Income Statement:
Net Sales $2,071
20X2
Current Assets:
cash $66
Short-term investments $101
Receivables, net allowance $154
Inventories $383
Prepaid expenses $31
Total current assets $735
Total current Liabilities $416
Income Statement:
Net Sales $2,005
20X1
Current Assets:
cash $62
Short-term investments $69
Receivables, net allowance $197
Inventories $341
Prepaid expenses $25
Total current assets $694
Total current Liabilities $388
Income Statement:
Net Sales $1,944
Required
1. Compute hese ratios for 20X3 and 20X2:
a. Current ratio
b. Acid-test Ratio
c. Days' sales in receivables
2. Write an explanation to which ratio caules showed improvement from 20X2 to 20X3 and which ratio values deteriorated.
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