Liquidity management: Bauman Company's total current assets, total current liabilities, and inventory for each of the past 4 years follow:
Item 2012 2013 2014 2015
Total current assets $16,950 $21,900 $22,500 $27,000
Total current liabilities $ 9,000 $12,600 $12,600 $17,400
Inventory $ 6,000 $ 6,900 $ 6,900 $ 7,200
a.) Calculate the firm's current and quick ratios for each year. Compare the resulting time series for these measures of liquidity.
b.) comment on the firm's liquidity over the 2012-2013 period.
c.) If you were told Bauman Company's inventory turnover for each year in the 2012-2015 period and the industry averages were as follows, would this information support or conflict with your evaluation in part (b)? Why?
Inventory Turnover 2012 2013 2014 2015
Bauman Company 6.3 6.8 7.0 6.4
Industry average 10.6 11.2 10.8 11.0