Angie Mohamed Ashraf

Financial Management
ASSIGNMENT 1
1- Quick ratio = 60+160/ 100 = 2.2
2- TATO = 2400/700 = 3.42
3- FATO = 2400/380 = 6.31
4- CATO = 2400/320 = 7.5
5- Debt ratio = 400/700 = 0.6
6- Liquidity of Inventory = ASP + ACP = 100*360/720 +
160*360 / 1920 = 80 times
7- Liquidity of AR = 30 times .

 Quick ratio : since quick ratio average was 2 and then

increased to 2.2 this means that the co. quick assets
increased to pay for its current liab.
 Debt ratio : the co. level of risk didn’t change in which the
total assets is financed by the total debts.
 TATO : since the TATO decreased this means that the co. is
not using the assets efficiently to produce sales . which is
not favorable for the co.
 FATO : since the FATO increased this means that the co. is
using the fixed assets efficiently to produce sales .
 CATO : CATO decreased which means that the co. wasn’t
capable to achieve the max. sales with the min.
investment in current assets .
 Liquidity of Inventory : since the liquidity of Inventory
increased the greater the need for cash to finance
operations .
 AR liquidity : the increase in average collection period of
AR indicates a higher quality in the turnover of AR .