Question

Brick Brewing Co. Limited is a Canadian-owned brewery with its head office in Kitchener, Ontario. The company brews, sells, and markets its products under the Waterloo, Laker, Red Baron, Red Cap, and Formosa brand names. The company also produces, sells, markets, and distributes Seagram’s Coolers across Canada. The information in Exhibits 7.24A to 7.24C was taken from the company’s 2017 annual financial statements.

EXHIBIT 7.24A Brick Brewing Co. Limited’s Statements of Financial Position



EXHIBIT 7.24B Excerpt from Notes to Brick Brewing Co. Limited’s 2017 Financial Statements



EXHIBIT 7.24C Excerpt from Notes to Brick Brewing Co. Limited’s 2017 Financial Statements

(c)

Calculate the inventory turnover ratio and days to sell inventory ratio for 2017 and 2016. Use the inventory values in 2017 and 2016 rather than the average inventory to calculate the ratios. (Round inventory turnover ratio to 2 decimal places and days to sell inventory ratio answers to 1 decimal place, e.g. 15.7. Use 365 days for calculation.)

		2017			2016
Inventory turnover ratio			times			times
Days to sell inventory ratio			days			days

Explain the amounts you selected from the financial statements to use in your calculation.

BB’s inventory turnover ratio                                                                        increaseddecreased in 2017, meaning that it was selling its inventories                                                                        slowerfaster than in the prior period. In fact, it took                                                                         fewermore days for BB to turnover its inventory in 2017.

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(d)

Calculate the current and quick ratios and comment on them. (Round answers to 2 decimal places, e.g. 15.75.)

		2017		2016
Current ratio
Quick ratio

Brick Brewing's current ratio has                                                                        improvedworsened and quick ratio has                                                                        improvedworsened.