ema P3-11 P3-11 Liquidity management Bauman Company's total current assets, total current liabili- ties, and inventory for each of the past 4 years follow: Item Total current assets Total current liabilities Inventory 2016 $16,950 9,000 6,000 Inventory turnover Bauman Company Industry average 2017 $21,900 12,600 6,900 2016 6.3 10.6 a. Calculate the firm's current and quick ratios for each year. Compare the resulting time series for these measures of liquidity. b. Comment on the firm's liquidity over the 2016-2019 period. c. If you were told that Bauman Company's inventory turnover for each year in the 2016-2019 period and the industry averages were as follows, would this infor- mation support or conflict with your evaluation in part b? Why? 2018 $22,500 12,600 6,900 2017 6.8 11.2 2018 7.0 10.8 2019 $27,000 17,400 7,200 2019 6.4 11.0

ema P3-11