The following ratios are available for Western Roofing:

Instructions
(a) Calculate the collection period, days sales in inventory, and operating cycle for each year.
(b) Has Western Roofing's liquidity improved or weakened over the three-year period? Explain.

(c) Do changes in turnover ratios affect profitability? Explain.
Taking It Further
At the beginning of 2017, the owner of Western Roofing decided to start offering customers a sales discount for early payment. The terms of credit sales were changed from n/30 to 2/10, n/30. Evaluate this decision.

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2017 1.6 to 1 0.8 to 1 10.6 times 7.3 times 2016 Current ratio Acid-test ratio Receivables turnover Inventory turnover 2.0 to 1 1.3 to 1 8.9 times 7.6 times 2015 1.9 to 1 1.2 to 1 9.0 times 7.5 times