# Parker Hannifin Corporation, headquartered in Cleveland, Ohio, manufactures motion control and fluid system components for a variety

## Question:

Parker Hannifin Corporation, headquartered in Cleveland, Ohio, manufactures motion control and fluid system components for a variety of industrial users. The firm's financial statements contain the following data (Year 3 is the most recent year; dollar amounts are in thousands):

**a.** Calculate Parker Hannifin's current ratio (current assets/current liabilities) for Years 1, 2, and 3.

**b.** Calculate Parker Hannifin's operating-cash-flow-to-current-liabilities ratio for Years 1,2, and 3.

**c.** Comment on the three-year trend in Parker Hannifin's current ratio and operating-cash-flowto-current-liabilities ratio. Do the trends in these two ratios reinforce each other or contradict each other as indicators of Parker Hannifin's ability to pay its current liabilities?

**d.** Calculate Parker Hannifin's operating-cash-flow-to-capital-expenditures ratio for Years 1, 2, and 3. Comment on the strength of this ratio over the three-year period.

## Step by Step Answer:

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