Galaxy United, Inc. 2009 Income Statement $ in millions) Net sales Less: Cost of

Question

Galaxy United, Inc. 2009 Income Statement $ in millions) Net sales Less: Cost of goods sold Less: Depreciation Earnings before interest and taxes Less: Interest paid Taxable Income Less: Taxes Net income $8,500 7,150 410 940 74 866 303 563 Galaxy United, Inc 2008 and 2009 Balance Sheets $ in millions) 2008 2009 2008 2009 Cash Accounts rec. Inventory Sub-total Net fixed assets Total assets $ 110 940 1,480 $2,530 3,190 $ 150 780 1530 $2,460 3,640 Accounts pavable Long-term debt Common stock Retained earnings $1,110 890 $3,190 530 $1140 1,178 $2,990 792 Total liab. & equity $5,720 What is the quick ratio for 2009? 82 O 228 95 1.34 O 216

Explanation / Answer

Quick Ratio = Liquid Current assets (Cash + Accounts Receivable) / Current Liabilities Quick Ratio of 2009 = ($150 + $780) / $1140 = 0.82

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