Question
Ratio Analysis Consider the following information taken from GER's financial statements: September 30 (in thousands) 2020 2019 Current assets: Cash and cash equivalents $1,274 $6,450
Ratio Analysis
Consider the following information taken from GER's financial statements:
September 30 (in thousands) | |||
2020 | 2019 | ||
Current assets: | |||
Cash and cash equivalents | $1,274 | $6,450 | |
Receivables | 30,071 | 16,548 | |
Inventories | 31,796 | 14,072 | |
Other current assets | 4,818 | 2,620 | |
Total current assets | $67,959 | $39,690 | |
Current liabilities: | |||
Current portion of long-term debt | $97 | $3,530 | |
Accounts payable | 23,124 | 11,228 | |
Accrued compensation costs | 5,606 | 1,929 | |
Accrued expenses | 9,108 | 5,054 | |
Other current liabilities | 874 | 777 | |
Total current liabilities | $38,809 | $22,518 |
Also, GER's operating cash flows were $14,359 and $14,186 in 2020 and 2019, respectively.
Required:
Round your answers to two decimal places.
1. Calculate the current ratios for 2020 and 2019.
Current Ratio | |
2020 | |
2019 |
2. Calculate the quick ratios for 2020 and 2019.
Quick Ratio | |
2020 | |
2019 |
3. Calculate the cash ratios for 2020 and 2019.
Cash Ratio | |
2020 | |
2019 |
4. Calculate the operating cash flow ratios for 2020 and 2019.
Operating Cash Flow Ratio | |
2020 | |
2019 |
5. Conceptual Connection: What are some reasons why GER's liquidity may be considered to be improving and some reasons why it may be worsening?
GERs liquidity appears to hold constant when one looks only at the ____________ (cash ratio, current ratio, quick ratio). However, because the _____________
(receivable and parables, receivables and inventories) may not be easily converted to cash, the liquidity of GER may be worsening.
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