Liquidity, Solvency and Profitability Ratios Liquidity, Solvency and Profitability Ratios)
For each company, compute the following ratios1. Current Ratio. All computations are in the excel sheets ALMARAEI= 18424/11327=1.6266ALSAFI, Inc.=48331/55561= 0.86992. Assets Receivable Turnover (ART)ALMARAEI Average Net Accounts Receivable =$7525Net sales =$65357ART= Net sales/Average Net Accounts Receivable =65357/7525=8.69ALSAFI, Inc. Average Net Accounts Receivable =$ 4025Net sales =$408214ART= Net sales/ Average Net Accounts Receivable =408214/4025 =101.423.
Average collection period (in days)Average collection period (in days) = average accounts receivable/ total net sales ALMARAEI Average collection period (in days)= 7525/ 65357 x 365=42.03 days ALSAFI, Inc.=4025/408214 x 365= 3.60 days4. Inventory turnover Inventory turnover ratio= cost of goods sold/Average inventory ALMARAEI = 65357/ 6942= 6.5663ALSAFI, Inc.= 304657/ 33836= 9.00395. Days in inventory Days in inventory=Inventory / COGS x 365ALMARAEI= 6942/45583