The following ratios are available for Tianjin Inc.:

Instructions
(a) Is Tianjin's liquidity improving or worsening? Explain.
(b) Do changes in turnover ratios affect profitability? Explain.
(c) Do changes in turnover ratios affect cash flow? Explain.
(d) Identify any steps that the company may wish to consider in order to improve its management of its receivables and inventory.

Transcribed Image Text:

2012 2010 Current ratio Receivables turnover Inventory turnover 1.5:1 8 times 6 times 1.5:1 7 times 7 times 1.5:1 6 times 8 times