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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 exce
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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