Question

Liquidity management Bauman Company's total current total currenti es, and inventory for each of the past 4 years follow Total current assets Total current $17,130 290 5,010 2017 $21,850 12200 6.830 2018 $22,170 12.00 7540 2019 $26 579 17550 8040 Calculate the firm's current and quick rates for each your compare the winge r for the measures of loudy b. Comment on the firm's guy over the 2015-2019 period If you were told that Bauman Company's inventory turnover for each you in the 2016-2019 period and the industry averages were as follows, would this information support or conflict with your evaluation in partib? Why? Bauman Company 6.5 a. Calculate the firm's current and quick ratios for each year. Bauman Company's current rate for year 2016 Round to two decimal places)

Answer 1

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Part a
		Year 2016	Year 2017	Year 2018	Year 2019
Total Current Assets	a	$       17,130	$       21,850	$       22,170	$       26,570
Total Current Liabilities	b	$          9,290	$       12,290	$       12,990	$       17,550
Inventory	c	$          5,010	$          6,830	$          7,540	$          8,040
Current Ratio	a/b	1.84	1.78	1.71	1.51
Quick Ratio	(a-c)/b	1.30	1.22	1.13	1.06
Part b
Above comparison indicating deteriorating liquidity of Buaman Company.
Part c
Lower inventory turnover indicates that liquidity is even worse than it appears in Part a.