ou have been hired as a financial analyst of a firm and your team is working on an independent assessment of XYZ Inc. Your assistant has provided you with the following data for XYZ Inc. and their industry. R r e d : Ratio 2020 2019 2018 2020- Industry Average Inventory Turnover 62.65 42.42 32.25 53.25 Receivables in days 94 63 50 115 Debt to Equity 0.75 0.85 0.90 0.88 Quick Ratio 1.028 1.03 1.029 1.031 Current Ratio 1.33 1.21 1.15 1.25 Required: a) In annual report of firm CEO wrote, we had higher liquidity largely due to an increase in highly liquid current assets (cash, account receivable and short-term marketable securities). Is the CEO correct? b) what can you say about the firm's collection period and inventory turnover?
ou have been hired as a financial analyst of a firm and your team is working on an independent assessment of XYZ Inc. Your assistant has provided you with the following data for XYZ Inc. and their industry. R r e d : Ratio 2020 2019 2018 2020- Industry Average Inventory Turnover 62.65 42.42 32.25 53.25 Receivables in days 94 63 50 115 Debt to Equity 0.75 0.85 0.90 0.88 Quick Ratio 1.028 1.03 1.029 1.031 Current Ratio 1.33 1.21 1.15 1.25 Required: a) In annual report of firm CEO wrote, we had higher liquidity largely due to an increase in highly liquid current assets (cash, account receivable and short-term marketable securities). Is the CEO correct? b) what can you say about the firm's collection period and inventory turnover?
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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You have been hired as a financial analyst of a firm and your team is working on an
independent assessment of XYZ Inc. Your assistant has provided you with the following
data for XYZ Inc. and their industry.
R
r
e
d
:
Ratio 2020 2019 2018
2020-
Industry
Average
Inventory Turnover 62.65 42.42 32.25 53.25
Receivables in days 94 63 50 115
Debt to Equity 0.75 0.85 0.90 0.88
Quick Ratio 1.028 1.03 1.029 1.031
Current Ratio 1.33 1.21 1.15 1.25
Required:
a) In annual report of firm CEO wrote, we had higher liquidity largely due to an increase in highly liquid current assets (cash, account receivable and short-term marketable securities). Is the CEO correct?
b) what can you say about the firm's collection period and inventory turnover?
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