The following are Lozier's 2010 and 2011 balance sheets and income statements for the years ended December 31, 2010 and December 31, 2011, respectively.
|
|
2010
|
|
2011
|
|
Cash
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$ 200,000
|
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$ 325,000
|
|
Accounts Receivable
|
400,000
|
|
450,000
|
|
Inventory
|
400,000
|
|
325,000
|
|
Intangible Assets
|
60,000
|
|
54,000
|
|
Total Assets
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$1,060,000
|
|
$1,154,000
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|
|
|
|
|
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Accounts Payable
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$ 396,000
|
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$ 420,000
|
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Short-term Notes Payable
|
100,000
|
|
100,000
|
|
Common Stock
|
3,000
|
|
3,000
|
|
Retained Earnings
|
564,000
|
|
636,000
|
|
Total Liabilities and Owner's Equity
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$1,063,000
|
|
$1,159,000
|
|
|
|
|
|
|
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2010
|
|
2011
|
|
Sales Revenue
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$ 945,000
|
|
$1,190,000
|
|
Cost of Goods Sold
|
(400,000)
|
|
(500,000)
|
|
Advertising Expense
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(20,000)
|
|
(25,000)
|
|
Office Supplies Expense
|
(10,000)
|
|
(13,000)
|
|
Interest Expense
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(5,000)
|
|
(5,000)
|
|
Net Income
|
$ 510,000
|
|
$ 647,000
|
Required:
Using an Excel spreadsheet, calculate the following ratios for 2010 and 2011:
1. Quick ratio
2. Accounts receivable turnover ratio
3. Average age of receivables. Assume a 360-day calendar year.
4. Inventory turnover ratio.
5. Calculate the average age of Lozier's inventory for 2010 and 2011. Assume a 360-day calendar year.
6. Given your calculations in parts 1-5, what conclusions might you draw about Lozier's business operations?