Question 6 [10 points]: Delta and Omega companies are competing in the same industry. They...
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Question 6 [10 points]: Delta and Omega companies are competing in the same industry. They are being evaluated by a bank that can lend money to only one of them, An analyst has collected the following data for these companies. Delta Omega Current ratio 2.1 2.1 Quick ratio 1.2 1.2 Accounts Receivable turnover 9.61 8.1 38 45 45.6 26.1 Average collection period Inventory turnover Days inventory held Accounts Payable turnover Days payable outstanding 8.0 14.0 4.45 7.3 82 50 a. Calculate cash conversion cycle for both companies. Which company is more liquid based on cash conversion cycle? (Show your calculation like A/B=C or (A+B)/C=D). [5 points): b. Based on given information, identify the company that you consider to be the better short term credit risk. Which companx would you choose to give credit? Why? [5 points)
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