Given the following ratios, how well has the company been managing its liquidity for the past two years? Current Year Past YearRatioCompanyIndustryCompanyIndustryCurrent ratio1.92.51.12.3Quick ratio0.71.00.40.9Number of days of receivables39.034.044.032.5Number of days of inventory41.030.345.027.4Number of days of payables34.336.029.435.5

Current ratio defines the relationship between current assets and current liabilities. Current…

Answered: Given the following ratios, how well…

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter16: Financial Statement Analysis

Section: Chapter Questions

Problem 11E

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Given the following ratios, how well has the company been managing its liquidity for the past two years?

Current Year Past Year

Ratio	Company	Industry	Company	Industry
Current ratio	1.9	2.5	1.1	2.3
Quick ratio	0.7	1.0	0.4	0.9
Number of days of receivables	39.0	34.0	44.0	32.5
Number of days of inventory	41.0	30.3	45.0	27.4
Number of days of payables	34.3	36.0	29.4	35.5

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