Liquidity, Solvency and Profitability Ratios Liquidity, Solvency and Profitability Ratios a) For each company, compute the following ratios 1. Current Ratio All computations are in the exce

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Liquidity, Solvency and Profitability Ratios

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Liquidity, Solvency and Profitability Ratios

a)      For each company, compute the following ratios

1.      Current Ratio

All computations are in the excel sheets

            ALMARAEI

= 18424/11327

=1.6266

ALSAFI, Inc.

=48331/55561

= 0.8699

2.      Assets Receivable Turnover (ART)

ALMARAEI

Average Net Accounts Receivable                 =$7525

Net sales                                                          =$65357

ART= Net sales/Average Net Accounts Receivable

            =65357/7525

=8.69

ALSAFI, Inc.

Average Net Accounts Receivable     =$ 4025

Net sales                                              =$408214

ART= Net sales/ Average Net Accounts Receivable

            =408214/4025

            =101.42

3.      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 days

4.      Inventory turnover

Inventory turnover ratio= cost of goods sold/Average inventory

ALMARAEI

= 65357/ 6942

= 6.5663

ALSAFI, Inc.

= 304657/ 33836

= 9.0039

5.      Days in inventory

Days in inventory=Inventory / COGS x 365

ALMARAEI

= 6942/45583



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