Question
Cullumber Inc. operates gaming stores across the country. Selected comparative financial statement data are shown below. CULLUMBER INC. Balance Sheet (partial) December 31 (in millions)
Cullumber Inc. operates gaming stores across the country. Selected comparative financial statement data are shown below.
CULLUMBER INC. Balance Sheet (partial) December 31 (in millions) | ||||||
---|---|---|---|---|---|---|
2021 | 2020 | 2019 | ||||
Current assets | ||||||
Cash | $790 | $91 | $60 | |||
Short-term investments | 59 | 58 | 39 | |||
Accounts receivable | 679 | 581 | 495 | |||
Inventory | 897 | 524 | 573 | |||
Prepaid expenses | 44 | 51 | 28 | |||
Total current assets | $2,469 | $1,305 | $1,195 | |||
Total current liabilities | $1,888 | $823 | $745 |
Additional information: | ||||||
---|---|---|---|---|---|---|
(in millions) | 2021 | 2020 | ||||
Net credit sales | $8,257 | $3,939 | ||||
Cost of goods sold | 5,327 | 2,646 |
Calculate the following liquidity ratios for 2021 and 2020. (Round current ratio and acid-test ratio to 2 decimal places, e.g. 0.75:1, receivables turnover and inventory turnover to 1 decimal place, e.g. 52.7 and collection period, days sales in inventory and operating cycle to 0 decimal places, e.g. 125.)
2021 | 2020 | |||||
---|---|---|---|---|---|---|
Current ratio | enter Current ratio rounded to 2 decimal places | :1 | enter Current ratio rounded to 2 decimal places | :1 | ||
Acid-test ratio | enter Acid-test ratio rounded to 2 decimal places | :1 | enter Acid-test ratio rounded to 2 decimal places | :1 | ||
Receivables turnover | enter Receivables turnover in times rounded to 1 decimal place | times | enter Receivables turnover in times rounded to 1 decimal place | times | ||
Collection period | enter a number of days rounded to 0 decimal places | days | enter a number of days rounded to 0 decimal places | days | ||
Inventory turnover | enter Inventory turnover in times rounded to 1 decimal place | times | enter Inventory turnover in times rounded to 1 decimal place | times | ||
Days sales in inventory | enter a number of days rounded to 0 decimal places | days | enter a number of days rounded to 0 decimal places | days | ||
Operating cycle | enter a number of days rounded to 0 decimal places | days | enter a number of days rounded to 0 decimal places | days |
Indicate whether each of the liquidity ratios calculated in part (a) is better or worse in 2021.
Current ratio | select an option BetterWorse | |
---|---|---|
Acid-test ratio | select an option BetterWorse | |
Receivables turnover | select an option BetterWorse | |
Collection period | select an option BetterWorse | |
Inventory turnover | select an option BetterWorse | |
Days sales in inventory | select an option BetterWorse | |
Operating cycle | select an option BetterWorse |
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