#5.9 Short term liquidity & operating efficiency

Using the ratios and information given below for SportsOutlet.com, analyze the following:

• Short-term liquidity: Cash flow, Accounts receivable, inventory, Accts payable
• Operating efficiency of the firm: Fixed Asset turnover, Total asset turnover
• Why do you think there are these trends? What do you think it means for the company?

2015 2014

Current ratio 1.50 1.35

Quick ratio 1.15 1.08

Cash flow liquidity ratio 1.39 1.32

Average collection period 10 days 7 days

Days inventory held 35 days 28 days

Days payable outstanding 86 days 79 days

Cash conversion cycle (41 days) (44 days)

Fixed asset turnover 27.36 times 22.14 times

Total asset turnover 1.93 times 2.21 times

Cash flow from operations (in millions) $523 $376

Net sales (in millions) $6,743 $5,187