Computing Liquidity Ratios
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 returns over the past few years. Selected information from the company's balance sheet follows. For 2007, the company reported sales revenue of $3,706,900 and cost of goods sold of $1,515,815.
CINTAS Balance Sheet (Amount in Thousands) | ||
Cintas | 2007 | 2006 |
Cash | $ 35,360 | $ 38,914 |
Marketable securities | 120,053 | 202,539 |
Accounts receivable, net | 408,870 | 389,905 |
Inventories | 231,741 | 198,000 |
Prepaid expense | 15,781 | 11,163 |
Accounts payable | 64,622 | 71,635 |
Accrued taxes | 70,763 | 95,363 |
Accrued liabilities | 263,512 | 239,061 |
Long-term debt due within one year | 4,141 | 26,653 |
Required:
Compute the current ratio, inventory turnover ratio, and accounts receivable turnover ratio (assuming that 60 percent of sales was on credit).
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