Can someone explain to me how you analyze this problem I am completely lost here??


Analyze the liquidity of Circuit City using each of the following analytical tools: current ratio, acid-test ratio, working capital, inventory turnover ratio, and accounts receivable turnover ratio. (Note: all data is in millions)

Cash $ 394
Receivables 429.5
Average inventory 1,328.9
Total current assets 2,220.8
Total current liabilities 940.5
Sales 9,100
Cost of goods sold 6,870.5

Have you studied those tools yet in school? Do you know what you need to calculate them?

Yes we have gone through these ratios in class but I am confused on how to calcute this problem with the current tools they are asking for... any guidance would help... Thank you

Financial ratio formulas and explanations (http://www.bizwiz.ca/ratio_calculation_formulas/financial_ratios_formulas_and_explanations.html)

Thank You I figured it out... I appreciate your links also.. Jim

Rock on!