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? a. For the three companies, the current ratios are: (Round to three decimal places.) Clorox Procter and Gamble Colgate-Palmolive Current ratio For the three companies, the quick ratios are: (Round to three decimal places.) Procter and Gamble Colgate-Palmolive Quick ratio Clorox For the three companies, the inventory turnover ratios are: (Round to three decimal places.) Procter and Gamble Colgate-Palmolive Clorox Inventory turnover For the three companies, the average collection periods are: (Round to three decimal places.) Clorox Procter and Gamble Colgate-Palmolive Average collection period For the three companies, the total asset turnover ratios are: (Round to three decimal places.) Procter and Gamble Colgate-Palmolive Clorox Total asset turnover b. What company is in the position of having greatest liquidity? (Select the best answer below.) A. Colgate-Palmolive B. Clorox C. Procter & Gamble D. It is not possible to determine based on the information given. 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? (Select the best answer below.) A. Yes, all three firms collect on sales in about 30 days, with the differences in average collection periods between the shortest (P&G) and longest (Colgate) collection periods only a few days. The most likely explanation is that companies compete with each other, selling similar products to most of the same customers, so probably offer similar credit terms OB. No, all three firms collect on sales in about 90 days, with the differences in average collection periods between the shortest (P&G) and longest (Colgate) collection periods only seven days. The most likely explanation is that companies compete with each other, selling similar products to most of the same customers, so probably offer similar credit terms OC. Yes, all three firms collect on sales in about 30 days, with the differences in average collection periods between the shortest (P&G) and longest (Colgate) collection periods more than thirty days. The most likely explanation is that companies compete with each other, by selling different products to most of the same customers. OD. It is not possible to determine based on the information given. d. Which company has the most rapid inventory turnover? (Select the best answer below.) O A. Clorox XB. Colgate-Palmolive * C. Proctor & Gamble OD. It is not possible to determine based on the information given. Which company appears to be least efficient in terms of total asset turnover? (Select the best answer below. O A. Colgate-Palmolive OB Clorox * C. Proctor & Gamble XD. It is not possible to determine based on the information given If a company is best at inventory turnover and worst at total asset turnover, what do you think that means? (Select the best answer below.) A. The most likely explanation is P&G employs more fixed assets than its competitors. B. The most likely explanation is P&G employs much less fixed assets than its competitors. C. It is not possible to determine based on the information given i X Data Table Sales Cost of goods sold Receivable Inventory Total current assets Total current liabilities Total assets Procter & Gamble $65,220 32,970 4,734 4,778 25,571 28,899 117,034 Colgate-Palmolive $15,202 6,069 1,416 1,165 4.330 3,310 12,124 Clorox $5,883 3,225 514 494 1,551 2,030 4,571 (Note: All dollar values are in thousands.) Done