Honest Tea Essay

1183 Words5 Pages
Julian Friedman Professor Coleman FIN 484 Case #2 Honest Tea Liquidity Ratio Current Ratio =Average Current Assets / Average Current Liabilities Quick Ratio = (Average Current Assets – Average Inventory) / Average Current Liabilities NWC-to-Total Assets Ratio = (Average Current Assets – Average Current Liabilities) / Average Total Asset Ratio/Year | 1998 | 1999 | % Change | Current | 193,121/1518 = 127.22 | (193,121 + 959,915)/2 / (1518 + 217630)/2=1153036/219148=5.26 | -95.86% | Quick | (193,121 – 98,477)/1518=62.34 | ((193,121 + 959,915)/2 – (98477 + 297571)/2)/ (1518 + 217630)/2= (576518 – 198024)/109574=3.45 | - 94.47 % | NWC-to-Total Assets | (193121 – 1518)/217153=0.88 | ((193,121 + 959,915)/2 – (1518 + 217630)/2) / (217153 + 1131601)/2= (576518 – 109574)/674377=0.69 | - 21.36 % | Inventory-to-sale Conversion Ratio = Average Inventories / (Cost of Goods sold/365) Sale-to-Cash Conversion period = Average Receivables / (Net sales /365) Purchase-to-payment Period = (Average Payable + Average Accrued Liabilities) / (Cost of Goods sold/365) Cash Conversion Cycle = Inventory-to-sale Conversion period + Sales-to-cash Conversion Period - Purchase-to-payment Conversion period Ratio/Year | 1998 | 1999 | Impact (Days) | Inventory to Sale | 98477/(222414/365) =161.6 | (98477 + 297571)/2 / (222414 + 745321)/2/365 =97 | - 64.62 | Sale to Cash | 61,066/ (266,106/365 =83.76 | ( (61,066 + 176,039)/2)/( (1,080,855/365)) = 40 | - 43.73 | Purchase to payment | 1,518/ (222,414/365) =2.49 | ( (1,518 + 217,630)/2)/( $ (745,321/365)) = 53.7 | - 51.17 | Cash conversion cycle | 161.59 + 83.76 – 2.49 = 242.86 | 96.97 + 40.03 – 53.66 = 83.34 | - 159.52 | Debt Management Ratio 1. Total-debt-to-Total-Assets Ratio = Average Total Debt / Average Total Assets 2. Equity Multiplier = Average Total Assets / Average Owner’s Equity

More about Honest Tea Essay

Open Document