The following ratios are available for Tym Inc.
|
Current ratio |
2012 |
2011 |
|
Receivables turnover |
1.3:1 |
1.5:1 |
|
Inventory turnover |
12 times |
10 times |
|
11 times |
9 times |
Instructions
(a) Is Tym”s short-term liquidity improving or deteriorating in 2012? Be specific in your answer, referring to relevant ratios.
(b) Do changes in turnover ratios affect profitability? Explain.
(c) Identify any steps Tym might have taken, or might wish to take, to improve its management of its receivables and inventory turnover.