Sherwood, Inc., had the following current assets and current liabilities at the

Question

Sherwood, Inc., had the following current assets and current liabilities at the end of two recent years: Year 2 Year 1 (in millions) (in millions) Cash and cash equivalents Short-term investments, at cost Accounts and notes receivable, net Inventories Prepaid expenses and other current assets Short-term obligations (liabilities) Accounts payable and other current liabilities $1,677 1,191 3,788 3,120 1,040 $1,436 2,668 2,736 3,329 1,231 3,534 7,205 7,879 a. Determine the (1) current ratio and (2) quick ratio for both years. Round to one decimal place. Year 2 Year 1 Current ratio Quick ratio b. What conclusion can be drawn from these data?

Explanation / Answer

Req a: Yearr 2 Year 1 Cash and cash equivalent 1677 1436 Short term investment 1191 2668 Accounts receivbale 3,788 2736 Inventories 3120 3329 Prepaid expense 1040 1231 Short term obligations 333 3534 Accounts payable and others 7879 7205 Current assets 10816 11400 Lquid assets 6656 6840 (Current assets-Inventory-Prepaid expense Current liabilities 8212 10739 Current ratio 1.32 1.06 (Current assets/Current Lliabilties) Quick ratio 0.81 0.64 (Liquid assets/ Current liabilities) Req b: Liquidity has been improved.

Related Questions

Navigate

• Browse (All)
• Browse S
• Subjects

---

---

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