maude limited s condensed financial statements provide the following information ins 3384301

Maude Limited s condensed financial statements provide the following information Instructions (a) Determine the following: 1. Current ratio at December 31, 2014 2. Acid-test ratio at December 31, 2014 3. Accounts receivable turnover for 2014 4. Inventory turnover for 2014 5. Days payables outstanding for 2014 6. Rate of return on assets for 2014 7. Profit margin on sales (b) Prepare a brief evaluation of the financial condition of Maude Limited and of the adequacy of its profits. (c) In examining the other current liabilities on Maude Limited s statement of financial position, you notice that unearned revenues have declined in the current year compared with the previous year. Is this a positive indicator about the client s liquidity? Explain. (d) Maude has a bonus plan for senior management based on a percentage of current year s profit. Management has approached you, the ethical accountant, as they would like to improve the company s profits for 2014. For example, they could discount the price of some of their goods to “move” profits from 2015 into 2014. Discuss how you would advise management in this situation.

 

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