Use the following information that was obtained from the 2016 and 2015 financial statements of Lake Company, River Corporation, and Ocean Company to answer the questions that follow.
REQUIRED: Compare the three companies and answer the following:
A Compute the accounts receivable turnover ratio for each company for 2016.
B Which company appears to have the best liquidity position based solely on the accounts receivable turnover? Explain.
Definitions:
Organizational Goals
Objectives or targets set by an organization that guide its strategy, operations, and endeavors towards achievement.
Inventory Investment
The capital tied up in goods and materials kept in stock, which represents a cost and risk to the business.
Demand for Inventoried Items
The need or desire for products or goods that are kept in stock for sale or distribution.
Reductions
Refers to decreases or cuts in quantities, capacities, workforce, costs, or other financial or operational metrics as a strategic or cost-saving measure.
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