- Evaluate Liquidity of ABC company for 2018 and 2019 using the following ratio and give Recommendation

1.Inventory Turnover in Days = Average Inventory / (COGS/365)

2.Accounts Receivable Turnover in Days = Average Gross Receivables / (Net Sales/365)

3.Cash Ratio = (Cash Equivalent + Marketable Securities)/Current Liabilities)

4.Current Ratio = Current Assets/Current Liabilities

5.Sales to Working Capital = Net Sales / Average Working Capital

Assets ($) 2019 2018 2017 Cash on Hand & at Banks 5936123 4037185 5960614 Accounts Receivable Net 1470879 1404974 1582153 Notes Receivable 0 0 0 Post Dated Cheques 29875 494480 400000 Short Term Investments 79029 79635 77462 Inventory 2480573 3663516 2230840 Spare Parts 296355 302883 325156 Total Current Assets 10648691 10431007 10628454 Long Term Investments 24000 24000 24000 Fixed Assets Net 1209909 10786341148657 Lands 1511731511730 Projects in Progress 5356 4378 0 Total Fixed Assets 1366438 1234185 1148657 Other Assets 0 0 0 Total Assets 12039129 11689 192 11801111 Liabilities ($) 2019 2018 2017 Accounts and Notes Payable 989423 528431 423042 Credit Banks 0 88265 0 Short Term Loans 0 0 0 Accrued Part of Long Term Loans 0 0 0 Total Current Liabilities 1766230 1338167 1218900 Long Term Loans & Notes Payable 0 0 0 D Corporate Bonds 0 0 D Other Liabilities 0 0 D Total Liabilities 1766230 1338167 1218900 Shareholders Equity (S) 2019 2018 2017 Authorized Capital 6000000 6000000 6000000 Subscribed Capital 6000000 6000000 6000000 Paid in Capital 6000000 6000000 6000000 Compulsory Reserves 1518451 1518451 1518451 Voluntary Reserve 605772 605772 605772 Other Reserves 0 0 0 Issuance Premium 0 0 0 D Issuance Discount 0 0 0 Treasury Stocks 0 0 Cash Dividends 840000 780000 840000 Stock Dividends 0 0 D Accumulated Change in Fair Value 0 0 D Retained Earnings 1308676 1446802 1617988 Total Shareholders Equity 10272899 10351025 10582211 Non-controlling interest 0 0 0 Total Liabilities & Shareholders Equity 12039129 11689192 11801111 & Income Statement ($) ( 2019 2018 2017 Operating Revenues 12956605 12474158 13508606 Operating Expenses 10914718 10960667 11564503 Gross Profit 2041887 1513491 1944103 General and Administrative Expenses 566178 545380 523409 Selling and Distribution Expenses 295548 235531 208653 Depreciation (Period) 245686 272601 293850 Other Operating Expenses 380049 66466 41068 Net Operating Income 800112 666114 1170973 Other Revenues 137457 157011 88791 Other Expenses 0 0 D Income Before Interest & Tax 937569 823125 1259764 Interest Expenses 0 0 D Net Income Before Tax 937569 823125 1259754 Income Tax (Period) 190695 105334 160680 Income Tax (Previous Years) 0 0 0 Universities and Research Train Fees 0 0 0 Board of Directors Remuniration 45000 45000 45000 Net Income 701874 672791 1054094 Non-controlling Interest 0 0 D Net Income Pertains to Shareholders 701874 672791 1054084