The financial statements of Jean Coutu are presented in Appendix B following the financial statements for Shoppers

Question:

The financial statements of Jean Coutu are presented in Appendix B following the financial statements for Shoppers Drug Mart in Appendix A.

Instructions

(a) Based on the information contained in the financial statements, calculate the following ratios for each company for the latest fiscal year. Industry ratios are shown in parentheses.

1. Current ratio (1.4:1)

2. Receivables turnover (22.0 times) (Assume all sales were credit sales and use net receivables instead of gross receivables.)

3. Inventory turnover (7.8 times)

4. Debt to total assets (30.6%)

5. Times interest earned (6.5 times)

(b) What conclusions about the companies' liquidity and solvency can you draw from the ratios calculated in part (a)?

Financial Statements
Financial statements are the standardized formats to present the financial information related to a business or an organization for its users. Financial statements contain the historical information as well as current period’s financial... Solvency
Solvency means the ability of a business to fulfill its non-current financial liabilities. Often you have heard that the company X went insolvent, this means that the company X is no longer able to settle its noncurrent financial...