The financial statements of Crockett Corporation are as follows:
The following additional information is available:
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a. |
The income tax rate is 50%; income taxes expense is included in other expenses. |
|
b. |
Interest expense is included in other expenses. Borrowings were outstanding for the entire year. |
|
c. |
Beginning balances of balance sheet accounts were the same as ending balances as applicable. |
|
d. |
All sales are on credit. |
Required: Descriptions of certain ratios are given below. Give the name of the corresponding ratio and calculate the ratios for the Crockett Corporation.
- Primary test for liquidity
- A more severe test of liquidity
- Test of efficiency of account receivable collection
- Indication of liquidity of inventory
- Reflection of financial strength and cushion for creditors
- Indication of the net productivity of each sales dollar
- Indication of management’s ability to efficiently use resources provided.
- (Appendix) Restate the financial statements to facilitate Scott formula analysis. Calculate the Scott formula.
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