Liquidity Solvency And Profitability Ratios Liquidity Solvency And Profitability

Liquidity, Solvency and Profitability Ratios

Liquidity, Solvency and Profitability Ratios

a)      For each company, compute the following ratios

1.      Current Ratio

All computations are in the excel sheets

            ALMARAEI

= 18424/11327

=1.6266

ALSAFI, Inc.

=48331/55561

= 0.8699

2.      Assets Receivable Turnover (ART)

ALMARAEI

Average Net Accounts Receivable                 =$7525

Net sales                                                          =$65357

ART= Net sales/Average Net Accounts Receivable

            =65357/7525

=8.69

ALSAFI, Inc.

Average Net Accounts Receivable     =$ 4025

Net sales                                              =$408214

ART= Net sales/ Average Net Accounts Receivable

            =408214/4025

            =101.42

3.      Average collection period (in days)

Average collection period (in days) = average accounts receivable/ total net sales

ALMARAEI

Average collection period (in days)

= 7525/ 65357 x 365

=42.03 days

ALSAFI, Inc.

=4025/408214 x 365

= 3.60 days

4.      Inventory turnover

Inventory turnover ratio= cost of goods sold/Average inventory

ALMARAEI

= 65357/ 6942

= 6.5663

ALSAFI, Inc.

= 304657/ 33836

= 9.0039

5.      Days in inventory

Days in inventory=Inventory / COGS x 365

ALMARAEI

= 6942/45583

 

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