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Question 2 (22 Marks) Shan Tung Merchandising Ltd. is required by its primary lender to maintain a current ratio of 2:1 in or

 
Instructions:
a. Calculate Shan Tung's current ratio for each of the three years in order to demonstrate that management's expectation has been met. (5 marks)
b. Calculate Shan Tung's accounts receivable turnover for 2015 and 2014. (4 marks)
c. Calculate Shan Tung's inventory turnover for 2015 and 2014. (4 marks)
d. Using the outcome of b. and C., evaluate whether the achievement of the current ratio targets indicates an improved liquidity or not. Identify any other change that has contributed to meeting this goal and evaluate the impact. (4 marks)
e. Calculate the Acid Test Ratio. Will this ratio always be lower than the current ratio? (5 marks) $ C.
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2014 2015 2.50 2013 1.70 1)current ratio 1.87 2) account receivable turnover 10.30 11.60 3) inventory turnover 2.80 3.29 4) a

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