Question

Use the following information, taken from each of the company's 2016 financial statements to complete the requirements. Cash from Current Company Operations Liabilities CAPEX Logitech International $258.111 $414.930 $56.615 Steelcase Inc 261.400 557.500 93.400 Chico's FAS Inc. 271.991 298.131 84.841 Vista Outdoor Inc 273.002 368.901 41.526 a. Compute the operating cash flow to current liabilities ratios. b. Rank-order each company from low to high liquidity (ability to pay liabilities as they come due). c. Compute the operating cash flow to CAPEX ratio. Compared with the rule of thumb of 1.0, assess the company's solvency as either low, medium, or high. d. Rank-order each company from low to high solvency. Round answers to two decimal places. For ranking, 1 is the highest and 4 is the lowest. Operating Cash Flow to Current Liquidity Operating Cash Solvency Company Liabilities Rank Flow to CAPEX Rank Logitech International Answer 0 Answer Answer 0 Answer Steelcase Inc Answer 0 Answer Answer 0 Answer Chico's FAS Inc. Answer 0 Answer Answer 0 Answer Vista Outdoor Inc Answer 0 Answer Answer 0 Answer

Answer 1

A.Logitech International 0.62

Steelcase Inc 0.47

Chico's FAS Inc. 0.91

Vista Outdoor Inc 0.74

B. Logitech International 0.62 MEDIUM

Steelcase Inc 0.47 LOW

Chico's FAS Inc. 0.91 HIGH

Vista Outdoor Inc 0.74 HIGH

C.Logitech International 4.56

Steelcase Inc 2.80

Chico's FAS Inc. 3.20

Vista Outdoor Inc 6.57

D. Logitech International 4.56 HIGH

Steelcase Inc 2.80 LOW

Chico's FAS Inc. 3.20 MEDIUM

Vista Outdoor Inc 6.57 HIGH

Step-by-step explanation:

A. Computation of the operating cash flow to current liabilities ratios

Using this formula

Operating Cash Flow to Current Liabilities Ratio = Operating Cash Flow / Current Liabilities

Let plug in the formula

Company Operating Cash Flow Current Liabilities Ratio =Liquidity

Logitech International $258.111 /$414.930 =0.62

Steelcase Inc $261.400/$557.500 =0.47

Chico's FAS Inc. $271.991 /$298.131 =0.91

Vista Outdoor Inc $273.002/$368.901 =0.74

B. Ranking -order of each company from low to high liquidity

Company Operating Cash Flow Current Liabilities Ratio Liquidity RANKING ORDER

Logitech International $258.111 $414.930 0.62 MEDIUM

Steelcase Inc $261.400 $557.500 0.47 LOW

Chico's FAS Inc. $271.991 $298.131 0.91 HIGH

Vista Outdoor Inc $273.002 $368.901 0.74 HIGH

C. Computation of operating cash flow to CAPEX ratio

Using this formula

Operating Cash Flow to CAPEX Ratio = Operating Cash Flow / CAPEX Ratio

Let plug in the formula

Company Operating Cash Flow CAPEX Ratio =Solvency

Logitech International $258.111 /$56.615 =4.56

Steelcase Inc $261.400/$93.400=2.80

Chico's FAS Inc. $271.991 /$84.841 =3.20

Vista Outdoor Inc $273.002 /$41.526 =6.57

D. Ranking -order for each company from low to high solvency

Company Operating Cash Flow CAPEX Ratio Solvency RANKING ORDER

Logitech International $258.111 $56.615 4.56 HIGH

Steelcase Inc $261.400 $93.400 2.80 LOW

Chico's FAS Inc. $271.991 $84.841 3.20 MEDIUM

Vista Outdoor Inc $273.002 $41.526 6.57 HIGH

Therefore operating cash flow to current liabilities ratios is:

Logitech International 0.62

Steelcase Inc 0.47

Chico's FAS Inc. 0.91

Vista Outdoor Inc 0.74

And the Ranking -order of each company from low to high liquidity is :

Logitech International 0.62 MEDIUM

Steelcase Inc 0.47 LOW

Chico's FAS Inc. 0.91 HIGH

Vista Outdoor Inc 0.74 HIGH

Operating cash flow to CAPEX ratio is :

Logitech International 4.56

Steelcase Inc 2.80

Chico's FAS Inc. 3.20

Vista Outdoor Inc 6.57

And the Ranking -order of each company from low to high solvency is :

Logitech International 4.56 HIGH

Steelcase Inc 2.80 LOW

Chico's FAS Inc. 3.20 MEDIUM

Vista Outdoor Inc 6.57 HIGH