Question
Liquidity managementBauman Company's total current assets, total current liabilities, and inventory for each of the past 4 years follow: Item 2016 2017 2018 2019 Total
Liquidity managementBauman Company's total current assets, total current liabilities, and inventory for each of the past 4 years follow:
Item | 2016 | 2017 | 2018 | 2019 |
Total current assets | $17,280 | $22,110 | $22,250 | $26,120 |
Total current liabilities | 8,530 | 12,170 | 12,670 | 17,190 |
Inventory | 5,620 | 6,680 | 7,450 | 7,680 |
a. Calculate the firm's current and quick ratios for each year. Compare the resulting time series for these measures of liquidity.
b. Comment on the firm's liquidity over the 2016-2019 period.
c. If you were told that Bauman Company's inventory turnover for each year in the 2016-2019 period and the industry averages were as follows, would this information support or conflict with your evaluation in part
(b). Why?
Item | 2016 | 2017 | 2018 | 2019 |
Bauman Company | 6.3 | 6.8 | 7.0 | 6.4 |
Industry Average | 11.5 | 12.1 | 11.7 | 11.9 |
a. Calculate the firm's current and quick ratios for each year.
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