Question
As lending officer for Prudent Bank, you are analyzing the financial statements of ZETA Corporation (see Case CC2 in the Comprehensive Case Chapter for data)
As lending officer for Prudent Bank, you are analyzing the financial statements of ZETA Corporation (see Case CC2 in the Comprehensive Case Chapter for data) as part of ZETAs loan application. Your superior requests you evaluate ZETAs liquidity using the two-year financial information available. The following additional information is acquired (in $ thousands): Inventory at January 1, Year 5, $32,000. Required: a. Compute the following measures for both Years 5 and 6: (1) Current ratio. (2) Days sales in receivables. (3) Inventory turnover. (4) Days sales in inventory. (5) Days purchases in accounts payable (assume all cost of sales items are purchased). (6) Cash flow ratio. b. Comment on any significant year-to-year changes identified from the analysis in (a)
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started