Response to the following problem:
Assume a company has the following financial information:
Cash and short-term investments $ 6
Prepaid expenses -0-
Capital assets 90
Total liabilities 40
Shareholders' equity 140
Sales 420
Credit sales 300
Current ratio 2.5:1
Acid-test ratio 1:1
Gross profit ratio 30%
Assume current assets consist of cash, short-term investments, accounts receivable, inventory, and prepaid expenses, and that ending balances are the same as average balances for the year.
Required: Calculate
1. Current liabilities
2. Inventory
3. Accounts receivable collection period
4. Number of days of sales in inventory.
5. Net financial debt.
Assume current liabilities consist of a bank loan.