You are evaluating the balance sheet for PattyCake’s Corporation. From the balan
ID: 2552357 • Letter: Y
Question
You are evaluating the balance sheet for PattyCake’s Corporation. From the balance sheet you find the following balances: cash and marketable securities = $330,000; accounts receivable = $1,320,000; inventory = $2,220,000; accrued wages and taxes = $560,000; accounts payable = $860,000; and notes payable = $720,000.
Calculate PattyCakes’ current ratio. (Round your answer to 2 decimal places.)
Current ratio times
Calculate PattyCakes’ quick ratio. (Round your answer to 2 decimal places.)
Quick ratio times
Calculate PattyCakes’ cash ratio. (Round your answer to 2 decimal places.)
Cash ratio times
Explanation / Answer
Current Assets
= Cash & Marketable securities + Accounts receivable + Inventory
= $ 330000 + $ 1320000 + $ 2220000
= $ 38,70,000
Current Liabilities
= Accrued wages & Taxes + Accounts Payable + Notes Payable
= $ 560000 + $ 860000 + $ 720000
= $ 21,40,000
1.Current Ratio
= Current assets / Current liabilities
= $ 38,70,000 / $ 21,40,000
= 1.81 Times
2.Quick Ratio
= (current assets - inventory) / Current liabilities
= ($38,70,000 - $ 22,20,000) / $ 21,40,000
= 0.77 Times
3. Cash Ratio
= (Cash + marketable securities) / current liabilities
= $ 3,30,000 / $ 21,40,000
= 0.15 Times
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