Question

Utilize the 2017 financial statements, annual reports, horizontal and vertical analysis for Amazon to calculate the following ratio.

Calculate the quick ratio for Amazon.

Answer 1

Quick Ratio: Quick Ratio is one of the financial ratios which is used to know the ability of the comapny to use near cash or its quick assets to retire its crrent liabilities immediately. It is otherwise called as Acid-test Ratio which is one of the types of Liquidity Ratios.

Quick Ratio = (Cash + Receivebles + Marketable Securities) / Current Liabilities.

The following are the financial amounts of Amazon for 2017 to calculate Quick Ratio which are in Millions of US $

Cash on hand - $30,986,

Receivables - $8,339,

Marketable securities - $0,

Current Liabilities - $ 57, 883

Quick Ratio = ($ 30,986 + $8,339) / $57,883

= ($ 39,325) / $57,883

Quick Ratio = 0.68  

The quick ratio of Amazon for 2017 is 0.68 which is less than 1. It means that the Amazon is unable to retire its current liabilities immediately with its available Quick Assets