The following data was taken from the 2009 and 2008 financial statements of Tast

Question

The following data was taken from the 2009 and 2008 financial statements of Tasty Sweets Corporation. EEB (Click to view the data.) Calculate the current ratio for each year. What happened to the company's liquidity from 2008 to 2009? Calculate the current ratio for each year. Begin by selecting the formula you will use to calculate the current ratio. Then enter the amounts in the formula and calculate the ratio for each year. (Round the current ratio to two decimal places.) Current assets Current liabilities Current ratio 2009 Data Table 2008 2009 2008 Current assets Total assets Current liabilities Total liabilities Total shareholders' equity S 384,728 S 385,642 590,112 157,990 282,244 307,868 649,803 151,084 261,676 388,127 Print Done

Explanation / Answer

Current ratio = Current assets / Current liabilities

The current ratio measures the degree to which current assets cover current liabilities. A higher current ratio in 2009 indicates greater ability to pay current liabilities with current assets, thus greater liquidity in 2009.

Liquidity increased from 2008 to 2009.

Current assets / Current liabilities = Current ratio 2009 $384,728 / $151,084 = 2.55 2008 $385,642 / $157,990 = 2.44

Related Questions

Navigate

• Browse (All)
• Browse T
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.