The comparative financial statement of new World Piano Company for 20X3,20X2, and 20X1 (A+ Guaranteed)

The comparative financial statement of new World Piano Company for 20X3,20X2, and 20X1 included the following selected data:

2003 2002 2003
In Millions

Cash $67 $66 $62
Short Term Investments $93 $101 $69
Recivables, net of allowance for doubtful
accounts of $7, $6, $4 respectively $206 $154 $197
Inventories $408 $383 $341
prepaid expenses $32 $31 $25
________________________________
total current assets $806 $735 $694
total current liabilities $440 $416 $388

Income Statement:
Net Sales $2,071 $2,005 $1,944

1. Compute these ratios for 2003 and 2002
A – Current Ratio
B – Acid-test Ratio
C – Days’ sales in receivables

2. Write a memo explaining to top management which ratio values showed improvement from 2002 to 2003 and which ratio values deteriorated. State whether the overall trend is favorable or unfavorable for the company and give the reason for your evaluation.

Here’s the SOLUTION

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