Algonquin Carpets reported the following amounts

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E8-23 Evaluating ratio data [15–20 min]

Algonquin Carpets reported the following amounts in its 2013 financial statements.
The 2012 figures are given for comparison.

Current assets:
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . .4,000 10,000
Short-term investments . . . . . . . . . . . .20,000 9000
Accounts receivable . . . . . . . . . . . . . . .63,000 76,000

and so on ...

Requirements
1. Calculate Algonquin’s acid-test ratio for 2013. Determine whether Algonquin’s
acid-test ratio improved or deteriorated from 2012 to 2013. How does
Algonquin’s acid-test ratio compare with the industry average of 0.80?

2. Calculate the days’ sales in receivables for 2013. How do the results compare
with Algonquin’s credit terms of net 30?

3. Calculate Algonquin’s accounts receivable turnover ratio. How does
Algonquin’s ratio compare to the industry average accounts receivable turnover
of 10?