love pie
Jun 15, 2013, 11:08 AM
Bauman Company’s total current assets, total current liabilities and inventory for each of the past 4 years follow:
Item 2009 2010 2011 2012
Total current assets (RM) 16,950 21,900 22,500 27,000
Total current liabilities (RM) 9,000 12,600 12,600 17,400
Inventory (RM) 6,000 6,900 6,900 7,200
a) Calculate the firm’s current and quick ratios for each year. Compare the resulting time series for these measures of liquidity. (8 marks)
b) Comment on the firm’s liquidity over the 2009-2010 period. (2 marks)
c) If you were told that Bauman Company’s inventory turnover for each year in the 2009 – 2012 period and the industry average were as follows, would this information support or conflict with your evaluation in part (b)? Why? (2 marks)
Item 2009 2010 2011 2012
Total current assets (RM) 16,950 21,900 22,500 27,000
Total current liabilities (RM) 9,000 12,600 12,600 17,400
Inventory (RM) 6,000 6,900 6,900 7,200
a) Calculate the firm’s current and quick ratios for each year. Compare the resulting time series for these measures of liquidity. (8 marks)
b) Comment on the firm’s liquidity over the 2009-2010 period. (2 marks)
c) If you were told that Bauman Company’s inventory turnover for each year in the 2009 – 2012 period and the industry average were as follows, would this information support or conflict with your evaluation in part (b)? Why? (2 marks)