The financial statements of Anglo American Platinum Limited (Amplats) are presented in Appendix B following the financial statements for Eastern Platinum Limited (Eastplats) in Appendix A.

Instructions

(a) Calculate the current ratio for each company for 2010.

(b) Calculate the inventory turnover and days in inventory ratios for each company for 2010. (Use "cost of operations" as equivalent to cost of goods sold for Eastplats.)

(c) The 2010 industry average for the current ratio was 2.3:1; the inventory turnover was 3.0 times; and the days in inventory was 122 days. What conclusions about each company's liquidity in 2010 can you draw based on your results in (a) and (b) and the industry averages?