QUESTION 16 Use the following information for Ace Retailers to answer the questi

Question

QUESTION 16 Use the following information for Ace Retailers to answer the question Financial ratios for the years ended May 31, 2016 2015 Liquidity Current (times) 1.57 1.27 1.45 1.45 1.22 1.43 9 days Quick (times) Cash flow liquidity (times Average collection period Days inventory held Days payable outstanding Cash Activity Fixed asset turnover Total asset turnover Other information Cash flow from operations (in millions of $) Revenues (in millions of S 33 days 27 days 79 days 35) days 69 days 28.12 times 23 47 times 75 days 2.13 times 243 times S567 S6,921 S392 5,264 All of the following statements are true with regard to Ace Retailers except O The firm has enough cash flow to cover current liabilities O The decline in the cash flow from operations amount from 2015 to 2016 explains the negative cash conversion cycle. Overal, Ace Retailers has good cash management and short term liquidity does not appear to be a concern for the firm. O Current assets are greater than current liabilities in both 2016 and 2015.

Explanation / Answer

Answer

This is because there is no ‘decline’ in cash flow from operations amount from 2015 to 2016.
cash flow from operations was $392 millions in 2015, which INCREASED to $ 567 millions in 2016.

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