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المحاسب الإداري المعتمد الجزء 2 A. Financial Statement Analysis

Orveline: Liquidity Through a Sterilization Shutdown

Orveline Sterile Products

Question of 6 Orveline: Liquidity Through a Sterilization Shutdown
Orveline: Liquidity Through a Sterilization Shutdown Case-based question
الحالة

Orveline Sterile Products makes single-use surgical drapes and gowns for hospitals. Every finished lot must be sterilized by an outside contractor before it can be shipped. On March 2, 20X5, a regulator suspended the contractor's plant pending a safety review, and no other sterilizer can take Orveline's volume for about 90 days.

Orveline's revolving credit agreement requires it to send its bank a liquidity stress report within ten business days of any event that halts shipments for more than 30 days, and Orveline's finance team is now preparing that report. The bank's reporting template fixes the stress case: no finished goods ship before the shutdown ends, and inventory and prepaid expenses produce no cash during it.

The suspended plant also sterilized the lots Orveline shipped in January and February. Hospital purchasing groups have put payment holds on $1,240,000 of those invoices until Orveline supplies revalidated sterilization certificates, which cannot be issued until the regulator's review is complete. The holds are expected to be released no earlier than 30 days after the shutdown ends, so the held invoices will not be collected within the 90-day horizon. All other receivables are expected to be collected on normal terms within the 90 days.

Condensed balance sheet at February 28, 20X5:

Item Amount
Cash and cash equivalents $1,380,000
Marketable securities 655,000
Accounts receivable, net 2,945,000
Inventory 3,860,000
Prepaid expenses 470,000
Total current assets $9,310,000
Property, plant and equipment, net 14,120,000
Other noncurrent assets 1,230,000
Total assets $24,660,000
Accounts payable $2,400,000
Accrued payroll and other accrued liabilities 1,185,000
Current portion of long-term debt 1,290,000
Total current liabilities $4,875,000
Long-term debt, less current portion 6,300,000
Shareholders' equity 13,485,000
Total liabilities and equity $24,660,000

الافتراضات

  • All ratios use the February 28, 20X5 balances above as reported; neither the shutdown nor the payment holds changes those balances.
  • The marketable securities are unrestricted short-term government treasury bills that Orveline can sell within two business days at approximately their carrying amount. No cash balance is restricted.
  • The liquidity assessment horizon is the expected 90-day shutdown. Prepaid expenses are insurance premiums and software subscriptions paid in advance and will not be refunded.
  • Express ratios as decimals (a ratio of one and a half is 1.50, not 150%). Keep full precision in intermediate steps and round half up to two decimal places only at the end.

Which calculation gives Orveline's cash ratio at February 28, 20X5?

الإجابة

The finance team is drafting the commentary that will accompany the bank's stress report. Select the TWO statements that are correct.

اختيار إجابتين. المحدد 0 / 2

الإجابة

Calculate Orveline's quick (acid-test) ratio at February 28, 20X5. Use the reported net receivables balance; do not adjust it for the payment holds. Treat inventory and prepaid expenses as non-quick assets. Enter the ratio as a positive decimal (not a percentage), rounded half up to two decimal places.

ratio

بـ 2 منازل عشرية.

Orveline defines its net working capital ratio as (current assets − current liabilities) ÷ total assets. Calculate this ratio at February 28, 20X5. Enter a positive decimal ratio (not a percentage), rounded half up to two decimal places.

ratio

بـ 2 منازل عشرية.

Complete the bank analyst's review note on Orveline's stress report. The most useful addition to the report would be Addition to the report . As for the ratios already in it, the quick ratio gives What the quick ratio shows the resources Orveline can use to pay creditors during the shutdown, because Reason . The cash ratio, which counts only cash and the treasury bills, gives What the cash ratio shows those resources.
Orveline's covenant reporting pack groups each measure by what it evaluates. Net working capital ÷ total assets is a Net working capital ÷ total assets . Return on assets is a Return on assets . Times interest earned is a Times interest earned . Cash flow from operations ÷ current liabilities is a Cash flow from operations ÷ current liabilities . Total debt ÷ total capital is a Total debt ÷ total capital . Operating profit margin is a Operating profit margin .

تظهر الدرجات والإجابات الصحيحة والشروح فور تسليم الإجابات. ولا يحصل السؤال غير المُجاب على أي درجة.

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