Question

Cintas designs, manufactures, and implements corporate identity uniform programs that it rents or sells to customers...

Cintas designs, manufactures, and implements corporate identity uniform programs that it rents or sells to customers throughout the United States and Canada. The company’s stock is traded on the NASDAQ and has provided investors with significant ROEs over the past few years. Selected information from the company’s statement of financial position follows. The company reported revenue of $2,175,000 and cost of sales of $2,682,995 for fiscal year 2015:

CINTAS
Statement of Financial Position
As of May 31,
  (amounts in thousands) 2015 2014
  Cash and cash equivalents $ 190,000 $ 72,250
  Short-term investments 119,944
Accounts receivable, less allowance of $20,432 and $13,589, respectively 271,000 309,000
  Inventories, net 198,040 319,400
  Prepayments 18,540 9,729
Accounts payable 79,970 88,089
  Accrued compensation and related liabilities 46,730 66,170
  Income taxes, current 13,190
  Long-term debt due within one year 1,136

Compute the current ratio, quick ratio, inventory turnover ratio, and receivables turnover ratio (assuming that 80 percent of sales was on credit) for 2015.

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Current Ratio 2015
Cash 1,90,000
Short trem investment 1,19,944
Accounts receivable 2,71,000
Inventories 1,98,040
Prepaid expense and other 18,540
Total Current Assets (A) 7,97,524
Accounts payable 79,970
Accrued compensation and related liabilities 46,730
Accrued liabilities 0
Accrued tax liability 0
Total Current Liabilities (B) 1,26,700
current Ratio (A/B) 6.29
Inventory Turnover Ratio
Cost of goods sold (a) 2682995
Average inventory (b) 258720
(198040+319400)/2
ratio (a/b) 10.37 times
Receivable turnover ratio
Net credit sales (80%*sales) (a) 1740000
Average A/R (b) 290000
(271000+309000)/2
ratio (a/b) 6 times
Quick ratio = Current assets - inventories - prepayments /current liablities
Quick ratio =797524-198040-0/126700
5 Times
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