6.1.1 Solutions_Lecture_11_WWAXXX_2009

# 6.1.1 Solutions_Lecture_11_WWAXXX_2009 - Calculate DLeons...

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1 Calculate D’Leon’s forecasted current and Calculate D’Leon’s forecasted current and quick ratios for 2009. quick ratios for 2009. 09 09 2,680 2,680 1,716 1,445 1,445 1.85 0.67 CA CA Inventory CR QR CL CL - = = - = = = × = ×

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2 Expected to improve but still below the industry average. Liquidity position is weak. Dangerous in some industries if CR < 2 Comments on CR and QR Comments on CR and QR 2009 2008 2007 Ind. CR 1.85x 1.1x 2.3x 2.7x QR 0.67x 0.4x 0.8x 1.0x
3 DSO is the average number of days after making a sale before receiving cash. 360 878 7,036 360 44.9 Receivables Receivables DSO Sales Average Sales Per Day = = = =

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4 Appraisal of DSO Appraisal of DSO D’Leon collects too slowly, and is getting worse. D’Leon has a poor credit policy 2009 2008 2007 Ind. DSO 44.9 39.0 36.8 32.0
What is the inventory turnover ratio vs. the What is the inventory turnover ratio vs. the industry average? industry average?

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6.1.1 Solutions_Lecture_11_WWAXXX_2009 - Calculate DLeons...

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