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