You have been hired as a financial analyst of a firm and your team is working on an independent assessment of XYZ Inc. Your assistant has provided you with the following data for XYZ Inc. and their industry. Ratio Inventory Turnover Receivables in days Debt to Equity 2020 2019 2018 2020- Industry Average R r 62.65 42.42 32.25 94 63 50 115 d 53.25 0.75 0.85 0.90 0.88 Quick Ratio Curr:ent Ratio 1.028 1.03 1.029 1.33 1.21 1.15 1.25 1.031 Required: a) In annual report of firm CEO wrote, we had higher liquidity largely due to an increase in highly liquid current assets (cash, account receivables and short- term marketable securities).” Is the CEO correct? b) What can you say about the firm's collection period and inventory turnover?
You have been hired as a financial analyst of a firm and your team is working on an independent assessment of XYZ Inc. Your assistant has provided you with the following data for XYZ Inc. and their industry. Ratio Inventory Turnover Receivables in days Debt to Equity 2020 2019 2018 2020- Industry Average R r 62.65 42.42 32.25 94 63 50 115 d 53.25 0.75 0.85 0.90 0.88 Quick Ratio Curr:ent Ratio 1.028 1.03 1.029 1.33 1.21 1.15 1.25 1.031 Required: a) In annual report of firm CEO wrote, we had higher liquidity largely due to an increase in highly liquid current assets (cash, account receivables and short- term marketable securities).” Is the CEO correct? b) What can you say about the firm's collection period and inventory turnover?
Cornerstones of Financial Accounting
4th Edition
ISBN:9781337690881
Author:Jay Rich, Jeff Jones
Publisher:Jay Rich, Jeff Jones
Chapter10: Stockholder's Equity
Section: Chapter Questions
Problem 88PSA: Ratio Analysis Consider the following information taken from the stockholders equity section: How do...
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You have been hired as a financial analyst of a firm and your team is working on an independent assessment of XYZ Inc. Your assistant has provided you with the following data for XYZ Inc. and their industry.
Ratio
Inventory Turnover
Receivables in days
Debt to Equity
2020
2019
2018
2020- Industry Average
R r
62.65 42.42 32.25
94 63 50 115
d
53.25 0.75 0.85 0.90 0.88
Quick Ratio Curr:ent Ratio
1.028 1.03 1.029
1.33 1.21 1.15 1.25
1.031
Required:
a) In annual report of firm CEO wrote, we had higher liquidity largely due to an
increase in highly liquid current assets (cash, account receivables and short-
term marketable securities).” Is the CEO correct?
b) What can you say about the firm's collection period and inventory turnover?
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