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What conclusions concerning the companys liquidity (based on your answers to a-f) can be drawn from these ratios? What conclusions concerning the companys liquidity (based
What conclusions concerning the companys liquidity (based on your answers to a-f) can be drawn from these ratios? What conclusions concerning the companys liquidity (based on your answers to a-f) can be drawn from these ratios? Are the ratios improving, stable, or getting worse?
a. Current ratio 2019: 4,673,457 / 2,661,604 = 1.2: 1 2018 : 4,683,323 / 3,138,829 = 1.5:1 b. Current cash debt coverage ratio 2019: Average Current Liabilities : 2,661,604 +3,138,829 / 2 = 2,900,216.5 1,664,223 / 2,900,216.5 = 0.57:1 2018: Average Current Liabilities : 3,138,829 + 2,745,200 = 2,942,014.5 -243,223 / 2,942,014.5 = 0.08:1 C. Receivables turnover ratio 7.45 d. Average collection period 365/ 7.45 = 48.9 e. Inventory turnover ratio 6,827,481/ 1,902,235.5 = 3.5: 1 f. Days in inventory 365/3.5 = 104.2
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