Below shows some financial data on General Mills versus Campbell Soup, you collected the following information to compare its performance against its peers. For each category, list which company demonstrates the strongest ratio. HINT: Strongest means best, not necessarily the highest. Ratios General Mills p Campbell Soup Stronger Company 1 days Sales outstanding 36.8 29.1 2 inventory turnover 6.5 5.6 3 quick ratio 0.3 0.28 4 Debt to Capital (Leverage) 68% 87% Why is the quick ratio considered by some to be a better measure of liquidity than the current ratio? A) The quick ratio more accurately reflects a firm's profitability. B) It leaves out the least liquid current asset from the numerator of the ratio. C) The current ratio does not include accounts receivable. D) It measures how "quickly" cash flows through the firm.
Below shows some financial data on General Mills versus Campbell Soup, you collected the following information to compare its performance against its peers. For each category, list which company demonstrates the strongest ratio. HINT: Strongest means best, not necessarily the highest. Ratios General Mills p Campbell Soup Stronger Company 1 days Sales outstanding 36.8 29.1 2 inventory turnover 6.5 5.6 3 quick ratio 0.3 0.28 4 Debt to Capital (Leverage) 68% 87% Why is the quick ratio considered by some to be a better measure of liquidity than the current ratio? A) The quick ratio more accurately reflects a firm's profitability. B) It leaves out the least liquid current asset from the numerator of the ratio. C) The current ratio does not include accounts receivable. D) It measures how "quickly" cash flows through the firm.
Financial Accounting: The Impact on Decision Makers
10th Edition
ISBN:9781305654174
Author:Gary A. Porter, Curtis L. Norton
Publisher:Gary A. Porter, Curtis L. Norton
Chapter10: Long-term Liabilities
Section: Chapter Questions
Problem 10.2DC
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Below shows some financial data on General Mills versus Campbell Soup, you collected the following information to compare its performance against its peers. For each category, list which company demonstrates the strongest ratio. HINT: Strongest means best, not necessarily the highest.
| Ratios | General Mills p | Campbell Soup | Stronger Company |
| 1 days Sales outstanding | 36.8 | 29.1 | |
| 2 inventory turnover | 6.5 | 5.6 | |
| 3 quick ratio | 0.3 | 0.28 | |
| 4 Debt to Capital (Leverage) | 68% | 87% |
- Why is the quick ratio considered by some to be a better measure of liquidity than the current ratio?
|
A) |
The quick ratio more accurately reflects a firm's profitability. |
|
B) |
It leaves out the least liquid current asset from the numerator of the ratio. |
|
C) |
The current ratio does not include accounts receivable. |
|
D) |
It measures how "quickly" cash flows through the firm. |
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