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Below are three ratios calculated for Huey, Louie, and Dewey Companies for 2008 and 2009? Required: Explain

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Below are three ratios calculated for Huey, Louie, and Dewey Companies for 2008 and 2009?

Below are three ratios calculated for Huey, Louie, and Dewey

Required:
Explain which company appears to be the mostliquid.

Transcribed Image Text:

Louie 2.3 to 1 1.8 to 1 1.5 to 2.2 to 1 5.8 times In millions) Huey Dewey Current ratio Inventory turnover ratio Quidk ratio 12/31/09 12/31/08 2.0 to 1 12/31/09 12/31/08 7.6 times 5.8 times 9.6 times 12/31/09 12/31/08 2.8 to 1 6.9 times 2.5 to 1 8.0 times 2.1to 1 0.5 to 1 1.4 to 1 12 to 1 1.0 to 1

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Huey Company appears to be the most liquid company becau...View the full answer


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Inventory turnover is a key metric that helps businesses evaluate the efficiency of their operations. A high turnover ratio is generally considered positive, indicating that the company is effectively selling its inventory and making efficient use of its resources. On the other hand, a low turnover ratio may indicate issues such as overstocking or slow sales and may require further examination to identify and address the underlying causes. Businesses use this ratio to make decisions about inventory levels, production schedules, and pricing strategies. It also helps businesses to identify areas where they may need to make improvements, such as reducing lead times for production or optimizing sales and marketing efforts. Additionally, inventory turnover is used by investors and analysts as a key performance indicator to evaluate the financial health and growth potential of a company.

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