Interpreting liquidity and activity ratios The table. E shows key financial data for three firms that compete in the consumer products market: Procter & Gamble, Colgate-Palmolive, and Clorox. a. Calculate each of the following ratios for all three companies: current ratio, quick ratio, inventory turnover, average collection period, total asset turnover. b. What company is in the position of having greatest liquidity? c. Would you say that the three companies exhibit similar performance or quite different performance in terms of collecting receivables? why do you think that might be? d. Which company has the most rapid inventory turnover? Which company appears to be least efficient in terms of total asset turnover? Are your answers to those questions a little surprising? If a company is best at inventory turnover and worst at total asset turnover, what do y think that means? a. For the three companies, the current ratios are: (Round to three decimal places.)

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Sales
Cost of goods sold
Receivable
Inventory
Procter & Gamble
$65,235
32,973
4,732
4,795
25,568
28,901
117,030
Total current assets
Total current liabilities
Total assets
(Note: All dollar values are in thousands.)
Colgate-Palmolive
$15,208
6,077
1,415
1,173
4,348
3,291
12,134
Clorox
$5,873
3,227
517
500
1,544
2,043
4,579
Transcribed Image Text:Sales Cost of goods sold Receivable Inventory Procter & Gamble $65,235 32,973 4,732 4,795 25,568 28,901 117,030 Total current assets Total current liabilities Total assets (Note: All dollar values are in thousands.) Colgate-Palmolive $15,208 6,077 1,415 1,173 4,348 3,291 12,134 Clorox $5,873 3,227 517 500 1,544 2,043 4,579
Interpreting liquidity and activity ratios The table, shows key financial data for three firms that compete in the consumer products market: Procter & Gamble, Colgate-Palmolive, and Clorox.
a. Calculate each of the following ratios for all three companies: current ratio, quick ratio, inventory turnover, average collection period, total asset turnover.
b. What company is in the position of having greatest liquidity?
c. Would you say that the three companies exhibit similar performance or quite different performance in terms of collecting receivables? Why do you think that might be?
d. Which company has the most rapid inventory turnover? Which company appears to be least efficient in terms of total asset turnover? Are your answers to those questions a little surprising? If a company is best at inventory turnover and worst at total asset turnover, what do you
think that means?
a. For the three companies, the current ratios are: (Round to three decimal places.)
Colgate-Palmolive
Current ratio
Procter and Gamble
Clorox
C
Transcribed Image Text:Interpreting liquidity and activity ratios The table, shows key financial data for three firms that compete in the consumer products market: Procter & Gamble, Colgate-Palmolive, and Clorox. a. Calculate each of the following ratios for all three companies: current ratio, quick ratio, inventory turnover, average collection period, total asset turnover. b. What company is in the position of having greatest liquidity? c. Would you say that the three companies exhibit similar performance or quite different performance in terms of collecting receivables? Why do you think that might be? d. Which company has the most rapid inventory turnover? Which company appears to be least efficient in terms of total asset turnover? Are your answers to those questions a little surprising? If a company is best at inventory turnover and worst at total asset turnover, what do you think that means? a. For the three companies, the current ratios are: (Round to three decimal places.) Colgate-Palmolive Current ratio Procter and Gamble Clorox C
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