The financial statements of Valerie’s Natural Foods include the following items:

Compute the following ratios for the current year:

1. Current ratio

2. Cash ratio

3. Acid-test ratio

4. Inventory turnover

5. Day’s sales in inventory

6. Day’s sales in receivables

7. Gross profit percentage

Current Ratio = Current Assets/Current Liabilities

= $190,000/136,000

= 1.40:1

Cash Ratio= Cash & Cash Equivalent /Current Liabilities

Cash & Cash Equivalent = Cash + Short term investment

=$16,000+ $19,000

= $35,000/$136,000

Cash Ratio =0.26:1

Acid Test Ratio = Quick Assets/Current liabilities

Quick Assets: Total Current Assets- Prepaid Exp- Inventory

Quick Assets =$190,000 -$ 78,000 - $17,000

= $95,000

Acid Test Ratio = $95,000 / $136,000

Acid Test Ratio =0.70:1

Inventory Turnover Ratio= Cost of Goods Sold/ Average Inventory.

Average Inventory = Beginning Inventory + Ending Inventory / 2

=$78,000+ $74,000 /2

Average Inventory= $76,000

Inventory turnover ratio = $312,000/$76,000

= 4.10 times

Days Sales in Inventory = No of Days in Year/ Inventory Turnover Ratio

=365 / 4.10

= 89 days

Days Sales in Receivable = (Average Accounts Receivable / Total Credit Sales) x 365

Average Accounts Received = $60,000 + $92,000 / 2

= $76,000

Days Sales In Received = $76,000/ $476,000 x365

Days Sales In Received = 58 days

Gross Profit Percentage = (Gross Profit / Net Sales) x 100

Gross Profit = Sales- Cost of Goods Sold

= ($476.000 - $312,000)/$476,000

= 34.45 %