Question

Cintas designs, manufactures, and implements corporate identity uniform programs that it rents or sells to customers throughout the United States and Canada. The company’s stock is traded on the NASDAQ and has provided investors with significant returns over the past few years. Selected information from the company’s balance sheet follows. For 2012, the company reported sales revenue of $3,708,400 and cost of goods sold of $1,516,015. CINTAS Balance Sheet (in thousands) 2012 2011 Cash $ 35,373 $ 38,927 Marketable securities — 202,542 Accounts receivable 408,884 389,918 Inventories 231,752 198,019 Prepaid expense and other 15,797 15,797 Accounts payable 64,624 71,642 Accrued compensation and related liabilities 70,769 95,381 Accrued liabilities 263,516 239,067 Accrued tax liability 2,568 — Long-term debt due within one year 4,155 26,667 Required: Compute the current ratio, inventory turnover ratio, and accounts receivable turnover ratio (assuming that 70 percent of sales were on credit). (Round your answers to 1 decimal place.)

What is the:

current ratio?

Inventory turnover ratio?

Accounts recieveable turnover ratio?

Answer 1

Current Ratio
Cash	35,373
Accounts receivable	408,884
Inventories	231,752
Prepaid expense and other	15,797
Total Current Assets (A)	691,806
Accounts payable	64,624
Accrued compensation and related liabilities	70,769
Accrued liabilities	263,516
Accrued tax liability	2,568
Total Current Liabilities (B)	401,477
current Ratio (A/B)	1.7
Inventory Turnover Ratio
Cost of goods sold (a)	1516015
Average inventory (b)	214886
(231752+198019)/2
ratio (a/b)	7.1	times
Receivable turnover ratio
Net credit sales (70%*sales) (a)	2595880
Average A/R (b)	399401
(408884+389918)/2
ratio (a/b)	6.5	times