5. Selected financial data for Amberjack Corporation follows. ($ thousands) Year 1 Year 2 Sales 271,161...

  

Transcribed Image Text:

5. Selected financial data for Amberjack Corporation follows. ($ thousands) Year 1 Year 2 Sales 271,161 457,977 Cost of goods sold 249,181 341,204 Net income (155,034) (403,509) Cash flow from operations (58,405) (20,437) Cash 341,180 268,872 Marketable securities 341,762 36,900 Accounts receivable 21,011 35,298 Inventories 6,473 72,106 Total current assets 710,427 413,176 Accounts payable 28,908 22,758 Accrued liabilities 44,310 124,851 Total current liabilities 73,218 147,610 a. Calculate the current and quick ratio at the end of each year. How has the company's short-term liquidity changed over this period? b. Assuming a 365-day year for all calculations, compute the following: i. The collection period each year based on sales. ii. The inventory turnover and the payables period each year based on cost of goods sold. Chapter 2 Evaluating Financial Performance 73 iii. The days' sales in cash each year. iv. The gross margin and profit margin each year. c. What do these calculations suggest about the company's performance? 5. Selected financial data for Amberjack Corporation follows. ($ thousands) Year 1 Year 2 Sales 271,161 457,977 Cost of goods sold 249,181 341,204 Net income (155,034) (403,509) Cash flow from operations (58,405) (20,437) Cash 341,180 268,872 Marketable securities 341,762 36,900 Accounts receivable 21,011 35,298 Inventories 6,473 72,106 Total current assets 710,427 413,176 Accounts payable 28,908 22,758 Accrued liabilities 44,310 124,851 Total current liabilities 73,218 147,610 a. Calculate the current and quick ratio at the end of each year. How has the company's short-term liquidity changed over this period? b. Assuming a 365-day year for all calculations, compute the following: i. The collection period each year based on sales. ii. The inventory turnover and the payables period each year based on cost of goods sold. Chapter 2 Evaluating Financial Performance 73 iii. The days' sales in cash each year. iv. The gross margin and profit margin each year. c. What do these calculations suggest about the company's performance?

Answer rating: 100% (QA)

a Current Ratio and Quick Ratio Year 1 Current Ratio Total Current Assets Total Current Liabilities ... View the full answer