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 ROEs over the past few years. Selected information from the company’s statement of financial position follows. The company reported revenue of $2,175,000 and cost of sales of $2,682,995 for fiscal year 2015:

CINTAS
Statement of Financial Position
As of May 31,
(amounts in thousands)	2015				2014
Cash and cash equivalents	$	190,000			$	72,250
Short-term investments		119,944				—
Accounts receivable, less allowance of $20,432 and $13,589, respectively		271,000				309,000
Inventories, net		198,040				319,400
Prepayments		18,540				9,729
Accounts payable		79,970				88,089
Accrued compensation and related liabilities		46,730				66,170
Income taxes, current		—				13,190
Long-term debt due within one year		—				1,136
Compute the current ratio, quick ratio, inventory turnover ratio, and receivables turnover ratio (assuming that 80 percent of sales was on credit) for 2015.

Answer 1

Answer
Current Ratio 2015
Cash	1,90,000
Short trem investment	1,19,944
Accounts receivable	2,71,000
Inventories	1,98,040
Prepaid expense and other	18,540
Total Current Assets (A)	7,97,524
Accounts payable	79,970
Accrued compensation and related liabilities	46,730
Accrued liabilities	0
Accrued tax liability	0
Total Current Liabilities (B)	1,26,700
current Ratio (A/B)	6.29
Inventory Turnover Ratio
Cost of goods sold (a)	2682995
Average inventory (b)	258720
(198040+319400)/2
ratio (a/b)	10.37	times
Receivable turnover ratio
Net credit sales (80%*sales) (a)	1740000
Average A/R (b)	290000
(271000+309000)/2
ratio (a/b)	6	times
Quick ratio = Current assets - inventories - prepayments /current liablities
Quick ratio =797524-198040-0/126700
5 Times