Use the following information that was obtained from the 2018 and 2017 financial statements of Pacific Company,River Corporation,and Ocean Company to answer the questions that follow.
Required

\begin{array}{lrrrr}\text { (in millions) } && \underline{\text { Pacific }} & \underline{\text { River }}& \underline{\text { Ocean }}\\\text { Accounts receivable } & \text { December } 31,2018 & \$ 33,000 & \$ 22,000 & \$ 41,500 \\& \text { December } 31,2017 & 30,000 & 12,800 & 42,600 \\\text { Inventory } & \text { December } 31,2018 & 22,600 & 12,600 & 54,200\\& \text { December 31,2017 } & 23,900 & 32,800 & 44,000 \\\text { Net sales (Credit) } & 2018 & 620,000 & 320,000 & 510,000\\& 2017 & 610,000 & 310,000 & 760,000 \\\text { Cost of goods sold } & 2018 & 211,000 & 406,000 & 311,000 \\& 2017 & 156,000 & 200,000 & 310,000\end{array}

Compare the three companies and answer the following:

\text { A) Compute the accounts receivable turnover ratio for each company for } 2018 \text {. }

B) Which company appears to have the best liquidity position based solely on the accounts receivable tumover? Explain.

Return Ratios Are Measures of the Relationship Between the

Multiple Choice

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