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Financial ratio question - Interpretation 1 Current Ratio: How does the quick ratio differ from the current ratio? Days in inventory [inventory age] : what

Financial ratio question - Interpretation 1

  1. Current Ratio: How does the quick ratio differ from the current ratio?
  2. Days in inventory [inventory age] : what is relationship between Inventory age [ inventory / ( Annual COGS/365)] and the Liquidity condition
  3. Inventory Turnover [COGS/inventory]: given its relation to inventory age, why use COGS instead of Sales?
  4. Day In Receivables [average collection Period ] = A/Rs / (annual Credit Sales /365)
    1. Why only credit sales are included in calculating this ratio?
    2. How does this ratio speak to the liquidity condition?
  5. Account receivable turnover [Annual Credit Sales / {A/R} ]: This larger ratio, the better is the firms liquidity condition?

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