Interpreting liquidity and activity ratios The table, shows key financial data for three firms that compete in the consumer products market: Procter & Gamble, Colgate-Palmolive, 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? Procter and Gamble Colgate-Palmolive Clorox Current ratio For the three companies, the quick ratios are: (Round to three decimal places.) * Data Table Procter and Gamble Colgate-Palmolive Clorox Quick ratio Colgate-Palmolive $15,206 6,082 Clorox $5,867 3,234 For the three companies, the inventory turnover ratios are: (Round to three decimal places.) 1,407 501 Procter and Gamble Colgate-Palmolive Clorox Sales Cost of goods sold Accounts receivable Inventory Total current assets Total current liabilities Total assets Procter & Gamble $65,236 32,961 4,738 4,787 25,575 28,899 117,042 Inventory turnover 1,177 4,347 3,293 12,116 506 1,558 2,036 4,572 For the three companies, the average collection periods are: (Round to three decimal places.) (Note: All dollar values are in thousands.) Procter and Gamble Colgate-Palmolive Clorox Average collection period Done For the three companies, the total asset turnover ratios are: (Round to three decimal places.) Procter and Gamble Colgate-Palmolive Clorox Total asset turnover Interpreting liquidity and activity ratios The table, shows key financial data for three firms that compete in the consumer products market: Procter & Gamble, Colgate-Palmolive, 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? Procter and Gamble Colgate-Palmolive Clorox Current ratio For the three companies, the quick ratios are: (Round to three decimal places.) * Data Table Procter and Gamble Colgate-Palmolive Clorox Quick ratio Colgate-Palmolive $15,206 6,082 Clorox $5,867 3,234 For the three companies, the inventory turnover ratios are: (Round to three decimal places.) 1,407 501 Procter and Gamble Colgate-Palmolive Clorox Sales Cost of goods sold Accounts receivable Inventory Total current assets Total current liabilities Total assets Procter & Gamble $65,236 32,961 4,738 4,787 25,575 28,899 117,042 Inventory turnover 1,177 4,347 3,293 12,116 506 1,558 2,036 4,572 For the three companies, the average collection periods are: (Round to three decimal places.) (Note: All dollar values are in thousands.) Procter and Gamble Colgate-Palmolive Clorox Average collection period Done For the three companies, the total asset turnover ratios are: (Round to three decimal places.) Procter and Gamble Colgate-Palmolive Clorox Total asset turnover