Question

Cintas designs and manufactures uniforms for corporations throughout the United States and Canada. The company's stock is traded on the NASDAQ. Selected information from the company's financial statements follows.
Required:
Compute the following ratios:
? Receivable turnover ratio (assume that all sales were credit sales)
? Inventory turnover ratio
? Current ratio
? Cash ratio
? Times interest earned ratio
? Cash coverage ratio

Answer 1

According to tha data,

Receivable stock Turnover ratio = Credit sales / Average debtor

= $4,552 / ($505+$508)÷2

= $4,552 / $506.5

= 8.99

Inventory stock Turnover ratio = Cost ot goods sold / Average Inventory

= $2,637 / ($251+$240)÷2

= $2,637 / $245.5

= 10.74

Current ratio = Current assets / current liabilities

Current assets=$513+$508+$251+$26 = $1,298

Current Liabilities = $150+$377+$1+$102 =$630

Current ratio = $1,298 / $630

= 2.06

Cash ratio = Cash and cash equivalents / Total current liabilities

= $513 / $630

=0.81

Tines Interest earned ratio = Earnings before interest and tax (EBIT)/ Interest

EBIT = Net income + Tax expense + Interest expenses

= $374 + $233 +$72

= $679

Times interest earned ratio = $679 / $72

= 9.43

Cash Coverage ratio = Cash flows from operating activities / Cash paid for interest

= $608 / $65

= 9.35

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