a Quick Ratio Calculate the companys quick ratio for 2016 an

a) Quick Ratio Calculate the company\'s quick ratio for 2016 and compare the result to the industry average.
b) Current Ratio Calculate the company’s current ratio for 2016 and compare the result to the industry average.
c) Accounts Receivable Turnover Calculate the company’s accounts receivable turnover for 2016 and compare the result to the industry average.

SHORT EXERCISES wine financial data for Hi-Tech Instruments to answer Short Exercises 13-1 through 13-10: Use the following financi 2016 (Thousands of Dollars, except Earnings per Share) Sales revenue. . . . . . . . Cost of goods sold. Net income........ Dividends .......... Earnings per share..... ......................... ... me ...................................................................... Dividends..... ............................................... ninas per share ... . ............................................ $210,000 $210,000 125,000 8,300 8.300 2,600 4.15 4.15 HI-TECH INSTRUMENTS, INC. Balance Sheets (Thousands of Dollars) Dec. 31, 2016 Dec. 31, 2015 $ 18,300 46,000 39,500 Assets Cash......... Accounts receivable (net). ... Inventory..... Total Current Assets..... Plant assets (net) ....... Other assets.......... Total Assets . . . . . . . . . 103,800 52,600 15,600 $172,000 $ 18,000 41,000 43,700 102,700 50,500 13,800 $167,000 $ 6,000 18,700 21,000 45,700 40,000 Liabilities and Stockholders\' Equity Notes payable-banks... Accounts payable....... Accrued liabilities . . . . . . . . . . . Total Current Liabilities. ..... 9% Bonds payable...... Total Liabilities . . . . . . . ................ ............... Common stock, $25 par value (2,000,000 shares)............... Retained earnings ............................. Total Stockholders\' Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . Total Liabilities and Stockholders\' Equity . . . . . . . . . . . . . . . . . . . . . . $ 6,000 22,500 16,500 45,000 40,000 85,000 50,000 37,000 87,000 $172,000 85,700 50,000 31,300 81,300 $167,000

Solution

Hi tech Instrument Inc

Industry Ratio

Diffrence

Quick Ratio

1.4

1.3

0.1

Current ratio

2.3

2.4

-0.1

Accounts Receivable Turnover

4.8

5.9

-1.1

Comparison

Quick Ratio- Hi-tech Instruments Inc has a better Liquid Position as compared to Industry.

Current Ratio-As compared to Industry Hi-tech Instruments Inc has a lower Current ratio which indicates its ability to pay its long term and short term obligations. Although the difference is not too much but satisfactory.

Accounts Turnover Ratio- As Compared to Industry Hi-tech Instruments Inc’s Accounts Receivable Turnover ratio is lower. Hi tech Inc is collecting its Receivables in 76 days (Approx) as compared to industry which collects its receivables in 62 days (approx).

Working Notes

Calculation of Quick Ratio

Formula =(Current Assets-Inventories )/Current Liabilities

(103800-39500)/45000

1.4

Calculation of Current ratio

Formula =Current Assets/Current Liabilities

103800/45000

2.3

Calculation of Accounts Receivables Turnover

Formula = Net credit sales /Average Accounts Receiveble

(210000/43500)

4.8

Average Receivables

Receivables in 2015

$                       41,000.00

Receivables in 2016

$                       46,000.00

$                       87,000.00

Average Receivables( 87000/2)

$                       43,500.00

	Hi tech Instrument Inc	Industry Ratio	Diffrence
Quick Ratio	1.4	1.3	0.1
Current ratio	2.3	2.4	-0.1
Accounts Receivable Turnover	4.8	5.9	-1.1