Finance

Financial data for Industrial Inc. follows

  Year 1 Year 2
Sales $160,835 $ 274,219
Cost of goods sold 141,829 209,628
Net income -91,432 -257,981
Cash flow from operations -35,831 12,538
Balance Sheet    
Cash 236,307 164,952
Marketable securities 209,670 22,638
Accounts receivable 12,645 21,655
Inventories 3,971 40,556
Total Current Assets 462,593 249,801
Accounts payable 17,735 13,962
Accrued Liabilities 27,184 76,596
Total Current Liabilities 44,919 90,558

 

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a. Calculate the current and quick ratio at the end of each year. How has the company’s short-term liquidity changed over the period?

b. Assuming a 365-day year for all calculation, compute the following rations and provide your interpretation of the company’s performance as suggested by these ratios?

1. The collection period for each year based on sales.

2. The inventory turnover each year.