The top part of Ramakrishnan, Inc,’s 2015 and 2014 balance sheets is listed belo
ID: 2786129 • Letter: T
Question
The top part of Ramakrishnan, Inc,’s 2015 and 2014 balance sheets is listed below (in millions of dollars). 2015 2014 2015 2014 Current assets: Current liabilities: Cash and marketable securities $ 50 $ 41 Accrued wages and taxes $ 40 $ 39 Accounts receivable 151 136 Accounts payable 95 84 Inventory 214 195 Notes payable 68 60 Total $ 415 $ 372 Total $ 203 $ 183 Calculate Ramakrishnan, Inc.’s current ratio for 2015 and 2014. (Round your answers to 2 decimal places.) Current ratio 2015 times 2014 times Calculate Ramakrishnan, Inc.’s quick ratio for 2015 and 2014. (Round your answers to 2 decimal places.) Quick ratio 2015 times 2014 times Calculate Ramakrishnan, Inc.’s cash ratio for 2015 and 2014. (Round your answers to 2 decimal places.) Cash ratio 2015 times 2014 times
Explanation / Answer
1. The current ratio of the company can be calculated with the help of following formula
Current ratio = Current assets/Current liabilities
Current ratio for 2014 = $415 Million /$203 million
= 2.04 times
Current ratio for 2014 = $372 Million /$183 million
= 2.03 times
2. The quick ratio of the company can be calculated with the help of following formula
Quick ratio (acid-test ratio) = (Current assets – Inventory)/Current liabilities
Quick ratio for 2014 = ($415 Million - $214 million) /$203 million
= 0.99 times
Quick ratio for 2014 = ($372 Million - $195 million) /$183 million
= 0.97 times
3. The cash ratio of the company can be calculated with the help of following formula
Cash ratio = Cash and marketable securities/ Current liabilities
Cash ratio for 2014 = $50 Million /$203 million
= 0.25 times
Cash ratio for 2014 = $41 Million /$183 million
= 0.22 times
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