Imation, a global technology company, reported the following selected items as part of its 2014 annual report
Question:
Assume a 0 percent tax rate.
REQUIRED:
Compute the following ratios:
1. Current ratio
2. Quick ratio
3. Receivable turnover (time and days)
4. Interest coverage
5. Return on assets
6. Inventory turnover (times and days)
7. Return on equity
2014 2013 $ 114.6 $132.6 Cash Accounts receivable 134.4 163.3 84.3 Inventory 57.7 Current assets 339.4 429.0 Total assets 499.2 641.8 Current liabilities 212.6 231.1 Shareholders' equity 240.8 373.2 $ 729.5 Sales Cost of goods sold 591.1 Interest expense 2.6 Net loss before taxes (109.3) (112.4) Net loss
Step by Step Answer:
1 Current Ratio Current Assets Current Liabilities 3394 2126 160 2 Quick Ratio Cash ST Investments A...View the full answer
Related Video
Inventory turnover is a key metric that helps businesses evaluate the efficiency of their operations. A high turnover ratio is generally considered positive, indicating that the company is effectively selling its inventory and making efficient use of its resources. On the other hand, a low turnover ratio may indicate issues such as overstocking or slow sales and may require further examination to identify and address the underlying causes. Businesses use this ratio to make decisions about inventory levels, production schedules, and pricing strategies. It also helps businesses to identify areas where they may need to make improvements, such as reducing lead times for production or optimizing sales and marketing efforts. Additionally, inventory turnover is used by investors and analysts as a key performance indicator to evaluate the financial health and growth potential of a company.
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