Finance & Accounting
Pages 7 (1757 words)
Name: Professor: Course: Date: Part 1 Question 1 a) Current ratio = Current assets/ Current liabilities $14,651,000 / $19,539,000 = 0.75times Quick ratio = (Current assets – Inventory)/ Current liabilities ($14,651,000 - 6,136,000) / $19,539,000 = 0.44times Total asset turn over = (Sales/ Total assets) $167,310,000 / $108,615,000 = 1.54times Inventory turnover = Costs of goods sold/Inventory $117,910,000 / $6,136,000 =19.22times Receivables turnover = Sales/ Accounts receivables $167,310,000 / $5,473,000 = 30.57times Total debt ratio = (Total assets- Total equity)/ Total assets ($108,615,000 ?
atio. This shows that the firm has less liquidity compared to the industry. Current ratio is greater than the lower quartile this implies that there exist other firms with less liquidity within the industry (Ehrhardt & Eugene, 91). The firm may posses more expected cash flows, or easier means to short-term debt. The turnover ratios appear to be greater compared to the industry median actually all are greater than the upper quartile. This implies that the firm utilizes its assets efficiently to generate sales. The financial leverage ratios appear to be lower than the industry median but higher than the lower quartile. ...