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Interpreting liquidity and activity ratios The table, , shows key financial data for three firms that compete in the consumer products market: Procter & Gamble,
Interpreting liquidity and activity ratios The table, shows key financial data for three firms that compete in the consumer products market: Procter & Gamble, ColgatePalmolive, and Clorox.
a Calculate each of the following ratios for all three companies: current ratio, quick ratio, inventory turnover, average collection period, total asset turnover.
b What company is in the position of having greatest liquidity?
c Would you say that the three companies exhibit similar performance or quite different performance in terms of collecting receivables? Why do you think that might be
d Which company has the most rapid inventory turnover? Which company appears to be least efficient in terms of total asset turnover? Are your answers to those questions a little surprising? If a company is best at inventory turnover and worst at total asset turnover, what do you think that means?
a For the three companies, the current ratios are: Round to three decimal places.
Data table
tableProcter & Gamble,ColgatePalmolive,CloroxSales$$$
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