Finance

Financial data for Industrial Inc. follows

	Year 1	Year 2
Sales	$160,835	$ 274,219
Cost of goods sold	141,829	209,628
Net income	-91,432	-257,981
Cash flow from operations	-35,831	12,538
Balance Sheet
Cash	236,307	164,952
Marketable securities	209,670	22,638
Accounts receivable	12,645	21,655
Inventories	3,971	40,556
Total Current Assets	462,593	249,801
Accounts payable	17,735	13,962
Accrued Liabilities	27,184	76,596
Total Current Liabilities	44,919	90,558

 

a. Calculate the current and quick ratio at the end of each year. How has the company’s short-term liquidity changed over the period?

b. Assuming a 365-day year for all calculation, compute the following rations and provide your interpretation of the company’s performance as suggested by these ratios?

1. The collection period for each year based on sales.

2. The inventory turnover each year.