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3. Problem 3 Balance sheet Current assets Cash Short-term investments Receivables, net of allowance for uncollectible accounts of $27, $21, and $15, respectively Inventories Prepaid expenses Total current assets Total current liabilities Income statement Net sales (in millions) 20x3 20x2 20x1 $ 85 S 134 244 334 8 $ 805 $ $ 404 $ 58 S 74 171 108 279 365 27 29 878 $ 855 503 $ 412 250 372 $ 2,807 $ 2,722 $2,210/nThe comparative financial statements of Stage Pools Inc. for 2003, 2002, and 2001 include the following selected data View the comparative financial de Read the requirements Requirement 1. As a financial advisor to an investor of Stage Pools, calculate the information for 2003 and 2002 that would be relevant in determining the company's liquidity position, and specify how each tem of information is relevant to your decision. Start by calculating the curent ratio for 2003 and 2002. Enter the amounts, and then divide to calculate the cument ratics. (Enter amounts in millions as provided to you in the problem statement. Round your answers to two decimal places) Total current assets + Total current liabilities Current ratio 200x2 Next, calculate the acid-test ratio for 2003 and 2002. Enter the amounts, and then divide to calculate the acid-test natics. (Enter amounts in millions as provided to you in the problem statement. Round your answers to two decimal places) Total quick assets + Total current able Acid-test ratio 20012 In this step, calculate the accounts receivable tumover for 2003 and 2012. Enter the amounts, and then divide to calculate the accounts receivable tumover ratios. (Enter amounts in millions as provided to you in the problem statement, XX. Round your answers to two decimal places) Accounts receivable turnover Net sales 2002 20013 Now, calculate the days' sales in average receivables for 2003 and 2002. Enter the amounts, and then divide. (Round your answers to two decimal places) Accounts receivable Number of days 20012 Average net accounts receivable TO: FROM turnover Specity how each item of information is relevant to your decision. Complete the following sentences. The current ratio measures the company's ability to pay the current ratio. The acid-test ratio does not include RE: Days' sales in average receivables Requirement 2. Complete a memo explaining to your client the results of your evaluation, including recommendations that will help Stage Pools improve its liquidity. Complete the following sentences MEMORANDUM Student Name Changes in ratio values from 2002 to 20x3 The addestratos stringent measure of a company's ability to pay The days' sales in receivables tells how long it takes to collect from 2002 to 20 This and is collecting receivables on a timeller basis. Stage Pools can improve its liquidity by Stage Pools because it shows that the company has an its ability to meet its financial obligations and/or

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