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.)

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

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

Please help me with this accounting question problem , image is clear pls download if no visible
Calculate the ratios of Woolworths Group (Australian retail company) for the year 2021: Ratios to calculate: Profitability (ROSF, ROCE, Gross margin, Operating profit margin, Cash flow to Sales*) Efficiency (Inventory turnover period, Average settlement period, Sales revenue to capital employed) Liquidity (Current ratio, Acid test (quick) ratio, Cash flow ratio*). Stability/Capital Structure (Gearing ratio, Interest cover ratio, Debt coverage ratio*) Investment/Market Performance (Earnings per share, Price earnings ratio, Operating cash flow per share*)
Do npt give image format
Please explain why solvency ratios, such as, debt, debt/equity, and time interest earned ratios are important to businesses. Please explain what information is provided by each ratio.
To evaluate a company’s performance, investors need a benchmark to which they can compare its financial ratios. What are some of the problems associated with these comparisons?
5. Profitability ratios Profitability ratios help in the analysis of the combined impact of liquidity ratios, asset management ratios, and debt management ratios on the operating performance of a firm. Your boss has asked you to calculate the profitability ratios of Petroxy Oil Co. and make comments on its second-year performance as compared with its first-year performance. The following shows Petroxy Oil Co.'s income statement for the last two years. The company had assets of $9,400 million in the first year and $15,037 million in the second year. Common equity was equal to $5,000 million in the first year, and the company distributed 100% of its earnings out as dividends during the first and the second years. In addition, the firm did not issue new stock during either year. Petroxy Oil Co. Income Statement For the Year Ending on December 31 (Millions of dollars) Year 2 Year 1 5,080 4,000 1,855 1,723 254 160 Net Sales Operating costs except depreciation and amortization Depreciation…