Question

Below are the balance sheets and income statements for Penticton Inc. (Penticton) for 2016 and 2017.


Required:
a. Calculate the following for Penticton for 2017 and 2016:
i. working capital
ii. current ratio
iii. debt-to-equity ratio
iv. gross margin
v. gross margin percentage
b. Explain why the amounts you calculated in (a) changed from 2016 to 2017.
c. Comment on Penticton’s liquidity position on December 31, 2017. As a prospective
lender of money to Penticton, what concerns would you have about its current
liquidity position?
d. What could Penticton’s management do to improveliquidity?


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  • CreatedFebruary 26, 2015
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