The financial statements of The North West Company Inc. are presented in Appendix A followed by the
Question:
The financial statements of The North West Company Inc. are presented in Appendix A followed by the financial statements for Sobeys Inc. in Appendix B.
Instructions
(a) Based on the information contained in the financial statements, calculate the following ratios for each company for the latest fiscal year. Industry ratios are shown in parentheses.
1. Current ratio (1.3:1)
2. Receivables turnover (37.1 times) (Assume all sales were on credit.)
3. Inventory turnover (9.5 times)
4. Debt to total assets (60.6%)
5. Times interest earned (10.8 times)
(b) What conclusions about the companies' liquidity and solvency can you draw from the ratios calculated in part CT10.2(a)? What ratios do you think are more important for your assessment?
Financial StatementsFinancial statements are the standardized formats to present the financial information related to a business or an organization for its users. Financial statements contain the historical information as well as current period’s financial... Solvency
Solvency means the ability of a business to fulfill its non-current financial liabilities. Often you have heard that the company X went insolvent, this means that the company X is no longer able to settle its noncurrent financial...
Step by Step Answer:
a Ratios North West in thousands Sobeys in millions 1 Current ratio 335581 221 25814 101 155501 2707...View the full answer
Financial Accounting Tools for Business Decision Making
ISBN: 978-1119368458
7th Canadian edition
Authors: Paul D. Kimmel, Jerry J. Weygandt, Donald E. Kieso, Barbara Trenholm, Wayne Irvine
