Refer the following table. Required: Calculate Airspace\'s liquidity and efficie

Question

Refer the following table.

Required:
Calculate Airspace's liquidity and efficiency ratios for 2017 and 2016. Use Exhibit 17.14. (Round the final answers to 2 decimal places.)

Analysis Component:
Identify whether the change in each ratio from 2016 to 2017 was favourable or unfavourable.

Exhibit link http://connect-nonprod.mheducation.com.s3.amazonaws.com/Media/Demo/bne/Ryerson/larson15ce_vol2/Exhibit_17-14.jpg

Airspace Technologies Inc. Comparative Balance Sheet Information November 30 (millions of $) 2017 2016 2015   Cash $ 64       $ 15       $ 27      Accounts receivable (net) 113       51       39      Inventory 195       231       191      Prepaid rent 75       39       27      Plant and equipment (net) 750       783       819      Accounts payable 99       56       46      Accrued liabilities 87       123       80      Income tax payable 20       8       15      Preferred shares 123       123       123      Common shares 243       243       243      Retained earnings 601       557       599   

Explanation / Answer

Current ratio = Current assets / Current Liabilities atio 2017 2016 Change 2017 2016 Current ratio        2.17 :1        1.80 :1 Favourable Current assets 447 336 Quick ratio        0.86 :1        0.35 :1 Favourable / Current Liabilities 206 187 Accounts receivable turnover      15.37 times      23.20 times Unfavourable Current Ratio               2.17            1.80 :   1 Days’ sales uncollected      23.75 days      15.73 days Unfavourable Inventory turnover        2.21 times        1.89 times Favourable Quick Ratio = Quick assets / Current Liabilities Days’ sales in inventory     165.06 days     193.02 days Favourable 2017 2016 Total asset turnover        1.09 times        0.94 times Favourable Quick assets 177 66 Accounts payable turnover        5.61 times        8.61 times Unfavourable / Current Liabilities 206 187 Quick Ratio               0.86            0.35 :   1 Accounts Receivable turnover = Net Credit sales / Average accounts receivables 2017 2016 Net Credit sales 1260 1044 / Average accounts receivables 82 45 Accounts Receivable turnover          15.37          23.20 times Days sales uncollected = 365 days / Accounts receivable turnover 2017 2016 No.of days in a year 365 365 Accounts Receivable turnover          15.37          23.20 Days sales uncollected          23.75          15.73 days Inventory turnover = Cost of goods sold / Average Inventory 2017 2016 Cost of good sold 471 399 / Average Inventory 213 211 Inventory turnover            2.21            1.89 times Days sales in inventory = 365 days / Inventory turnover 2017 2016 No.of days in a year 365 365 / Inventory Turnover            2.21            1.89 Days sales in inventory       165.06       193.02 days Total asset turnover = Net Sales / Average total assets 2017 2016 Net sales 1260 1044 / Average total assets    1,158.00    1,111.00 Total asset turnover            1.09            0.94 times Accounts Payable turnover = Total Purchases / Average accounts payable Total Purchases = Cost of good sold + Ending Inventory - Beginning Inventory 2017 2016 Total Purchases    435 439 / Average Accounts Payables          77.50          51.00 Accounts Payable turnover            5.61            8.61 times

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