Exercise 12-8 Matthias Medical manufactures hospital beds and other institutional furniture. The...

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Exercise 12-8 Matthias Medical manufactures hospital beds and other institutional furniture. The company's comparative balance sheet and income statement for 2012 and 2013 follow.
Matthias Medical Comparative Balance Sheet As of December XXXXXXXXXXAssets Current assets Cash $393,000 $417,450 Accounts receivable, net 1,087,000 776,450 Inventory 750,000 681,000 Other current assets 381,400 247,100 4 Total current assets 2,611,400 2,122,000 Property, plant, & equipment, net 8,651,745 8,439,865 Total assets $11,263,145 $10,561,865

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David · Accepted Answer

Exercise 12-8 
1. Working Capital = Current Assets- Current Liabilities =  
=2611,400 – 3203,000  
= -591600 
 
2. Current Ratio = Current Assets/ Current liabilities 
= 0.82
3. Acid test ratio = Quick assets/ Current liabilities 
= 2611400- 750,000 / 3203000 
= 0.58
4. Accounts receivable Turnover = Net Credit Sales/ Average Accounts receivable 
Average AR = 776450+1087,000/2 =  931,725 
AR Turnover = 10177,200/ 931,725 = 10.92 times
5. Average collection period = 365 / AR Turnover 
= 365/ 10.92 = 33.42 days  
6. Average days to sell inventory = (Closing Inventory/ Cost of goods sold ) * 365 
= 750,000 / 5613200 * 365 
= 48.77 days
Exercise- Matthias Medical 
1.

Exercise 12-8 Matthias Medical manufactures hospital beds and other institutional furniture. The company's comparative balance sheet and income statement for 2012 and 2013 follow. Matthias Medical...

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