Cintas Corporation is the largest uniform supplier in North America Selected inf

Question

Cintas Corporation is the largest uniform supplier in North America Selected information from its annual report follows. For the 2013 fiscal year, the company reported sales revenue of $61 billion and Cost of Goods Sold of $4 3 billion 2013 2012 Balance Sheet (amounts in millions) Cash Accounts Receivable,net Prepaid Rent Accounts Payable Salaries and Wages Payable Income Tax Payable Notes Payable (short-term) 5540 5430 050810 330 340 795 660 210 90 520 520 116 28 28 320 Required Assuming that all sales are on credit, compute the following ratios for 2013. (Round your answers to 2 decimal places.) Current Ratio Inventory Turnover Ratlo Accounts Receivable Turnover Ratio

Explanation / Answer

Current ratio = Inventories + Accounts receivable + Prepaid rent + Cash /Accounts payable + Salaries and Wages payable + IT payable + notes payable
= $860 + $540 + $330 + $795 / $210 +$520 + $116 + $28
= $2525/$874
=2.89x

b) Inventory turnover ratio = Cost of goods sold/Average inventory
Average inventory = 330+340 /2 = $335 million
Since 1 billion = 1000 million
Cost of goods sold = $4.3*1000 million = $4300 million
Inventory turnover ratio = $4300/$335 = 12.84x

c) Accounts receivable turnover ratio = Sales/Average accounts receivable
Average accounts receivable = 860+810 / 2 = $835 million
Accounts receivable turnover ratio= $6100 million/$835 million
= 7.31x

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