Use the following information to calculate these various solvency measures: 2
a) NWC,
$900,000-$700,000 $200,000 NWC
B) WCR,
($350,000+$250,000)-$300,000
$600,000-$300,000 $300,000 WCR
c) Current ratio,
$900,000/$700,000= Current Ratio of 1.28
The company has $1.28 of current assets for $1.00 of current liabilities.
d) Quick ratio
($900,000-$350,000)/$700,000
$550,000/$700,000= Quick Ratio of 0.79
The company has $0.79 in non-inventory current assets for each $1 in current liabilities.
e) Cash Conversion Efficiency (CCE)
$130,000/$1,800,000=0.072 100
CCE 7.2% The firm converts revenues into cash flows.
d) Days cash held (DCH)
Cash $150000
Current asset $900,000
Current liability $700,000
Inventory $350,000
Receivable $250,000
Payable $300,000 Sales 1,800, 000
COGs 40% of sales
Cash flow from operation 130,000