The ratios in the table below are calculated using the information from CiM's financial statements presented in the case. Complete the last column of the table, to indicate, for each ratio, whether the trend

indicates increasing or decreasing liquidity?

Note: Confirm your understanding of how each ratio is calculated by re$-$calculating the ratios and comparing your answers to the amounts provided in the table.

What does "increasing liquidity" mean? What about "decreasing liquidity"?

Explain how a company's policy regarding vendor payments can affect the current ratio and the cash conversion cycle and can result in conflicting signals regarding a firm's liquidity.

Do you think CiM's decision to defer payments to vendors is ethical? Why or why not? Support your answer with ethical reasoning.

Discuss the broader notion that corporate policy can have unintended consequences for those who must administer the policy....give other examples and personal insights, if possible.

Provide a conclusion regarding your team's recommended approach toward setting policy, such as payments to vendors. What 'take$-$aways' can your team provide to future managers?The ratios in the table below are calculated using the information from CiM$$s financial statements presented in the case. Complete the last column of the table, to indicate, for each ratio, whether the trend indicates increasing or decreasing liquidity?

Note: Confirm your understanding of how each ratio is calculated by re$-$calculating the ratios and comparing your answers to the amounts provided in the table.

Liquidity Ratios Year $1$ Year $2$ Year $3$ Increasing or Decreasing Liquity?

Quick Ratio $0\mathrm{.}830\mathrm{.}720\mathrm{.}64$

Current Ratio $2\mathrm{.}171\mathrm{.}581\mathrm{.}37$

# Receivables Turns $12,3612\mathrm{.}7413\mathrm{.}21$

# Inventory Turns $3\mathrm{.}333\mathrm{.}834\mathrm{.}04$

# Payables Turns $10\mathrm{.}185\mathrm{.}414\mathrm{.}33$

DRO $29\mathrm{.}5428\mathrm{.}6427\mathrm{.}63$

DIO $109\mathrm{.}6195\mathrm{.}3090\mathrm{.}39$

DPO $35\mathrm{.}8467\mathrm{.}4284\mathrm{.}34$

CCC $103\mathrm{.}356\mathrm{.}533\mathrm{.}7$

What does $$increasing liquidity$$ mean? What about $$decreasing liquidity$?$

Explain how a company$$s policy regarding vendor payments can affect the current ratio and the cash conversion cycle and can result in conflicting signals regarding a firm's liquidity.

Do you think CiM$$s decision to defer payments to vendors is ethical? Why or why not? Support your answer with ethical reasoning.

Discuss the broader notion that corporate policy can have unintended consequences for those who must administer the policy...give other examples and personal insights, if possible.

Provide a conclusion regarding your team$$s recommended approach toward setting policy, such as payments to vendors. What $$take$-$aways$$ can your team provide to future managers?