Go to http://finance.yahoo.com and review the most recent year’s annual balance

Question

Go to http://finance.yahoo.com and review the most recent year’s annual balance sheet for Coca-Cola (“KO”). Calculate the company’s current ratio.

Go to http://finance.yahoo.com and review the most recent year’s annual balance sheet for Coca-Cola (“KO”). Calculate the company’s quick ratio.

Use Balance Sheet for 2016

Which of the following best describes the interpretation of your findings for the current and quick ratios of KO?
Select one:
a. KO has ample current liabilities to pay for its current assets.
b. KO seems to be having an issue with selling its inventory.
c. The inventory turnover of KO is below average.
d. The current and quick ratios for KO are strong and there are no apparent liquidity issues.
e. Both b. and c. above are correct.

Explanation / Answer

Current ratio = current assets/current liabilities = 34,010,000/26,532,000 = 1.28

Quick ratio = (current assets - inventory)/current liabilities = (34,010,000 - 2,675,000)/26,532,000 = 1.18

ence, Option D: The current and quick ratios for KO are strong and there are no apparent liquidity issues

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