Utilizing book: Principles of Managerial Finance, Brief, 8th EditionBy: Chad J. Zutter; Scott B. SmartPublisher: Pearson, 2019
Answer the following questions from chapter 3 page 126, prob P3-15
Interpreting liquidity and activityratios.
Interpreting liquidity and activityratios: The table below shows key financial data for three firms that competein the consumer products market: Procter & Gamble, Colgate-Palmolive, andClorox. All dollar values are in thousands.
Procter& Gamble Colgate-Palmolive Clorox
Sales $65,231 $15,195 $5,875
Cost of goods sold $32,967 $6,072 $3,233
Receivables $4,729 $1,411 $514
Inventory $4,787 $1,171 $501
Total Current Assets $25,572 $4,338 $1,549
Total Current Liabilities $28,891 $3,305 $2,037
Total Assets $117,033 $12,123 $4,568
a. Calculate each of the following ratios for all three companies: currentratio, quick ratio, inventory turnover, average collection period, total assetturnover.
b. Which company is in the position of having greatest liquidity?
c. Would you say that the three companies exhibit similar performance orquite different performance in terms of collecting receivables? Why do youthink that might be?
d. Which company has the most rapid inventory turnover? Which companyappears to be least efficient in terms of total asset turnover? Are youranswers to those questions a little surprising? If a company is best atinventory turnover and worst at total asset turnover, what do you think thatmeans?
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