Question
Dam Inc. has a current ratio of 3.00x; $31,750 in cash; $15,250 in accounts receivable; and total current liabilities of $30,000. Its current assets consist
Dam Inc. has a current ratio of 3.00x; $31,750 in cash; $15,250 in accounts receivable; and total current liabilities of $30,000. Its current assets consist of only Cash, AR, and Inventory. The company recently reported annual sales of $100,000. Its competitor Fam Corp. also reported $100,000 in sales in its most recent financial report, but has a current ratio of 2.00x, $21,500 in cash, $12,200 in accounts receivable, and total current liabilities of $25,000. Fam Corp. has only the same accounts among its current assets.
Based on your calculations in the previous question:
Dam Inc. has a ["higher", "lower", "same"] Inventory Turnover ratio, which suggests its performance in this area is ["better than", "worse than", "same as"] Fam Corp.
Dam Inc. has a ["higher", "lower", "same"] DSO ratio, which suggests its performance in this area is ["better than", "worse than", "same as"] Fam Corp.
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