Chapter 15, Problem 4SEB

FINANCIAL RATIOS Based on the financial statements, shown on pages 605–606, for McDonald Carpeting Co. (income statement, statement of owner’s equity, and balance sheet), prepare the following financial ratios. All sales are credit sales. The balance of Accounts Receivable on January 1, 20--, was $6,800.

1. 1. Working capital
2. 2. Current ratio
3. 3. Quick ratio
4. 4. Return on owner’s equity
5. 5. Accounts receivable turnover and the average number of days required to collect receivables
6. 6. Inventory turnover and the average number of days required to sell inventory