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You are evaluating the balance sheet for Patty Cake's Corporation. From the balance sheet you find...

You are evaluating the balance sheet for Patty Cake's Corporation. From the balance sheet you find the following balances: cash and marketable securities = $470,000; accounts receivable = $1,060,000; inventory = $1,960,000; accrued wages and taxes = $430,000; accounts payable = $730,000, and notes payable = $460,00. Calculate Patty Cake's current ration. (Round your answer to 2 decimal places.) Current ratio; Calculate Patty Cake's quick ratio. (round your answer to 2 decimal places.) Quick ratio; Calculate Patty Cake's cash ratio. (Round your answer to 2 decimal places. Cash ratio

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Answer #1

PattyCake's current ratio.

Current Ratio = Total Current Assets / Total Current Liabilities

= [Cash & Marketable securities + Accounts Receivables + Inventories] / [Accrued wages and taxes + Accounts Payable + Notes Payable]

= [$470,000 + $1,060,000 + $1,960,000] / [$430,000 + $730,000 + $460,000]

= $3,490,000 / $1,620,000

= 2.15 Times

PattyCake's quick ratio

Quick Ratio = [Cash and marketable securities + Accounts Receivables] / Total Current Liabilities

= [$470,000 + $1,060,000] / $1,620,000

= $1,530,000 + $1,620,000

= 0.94 Times

PattyCake's cash ratio

Cash Ratio = Cash & Marketable Securities / Total Current Liabilities

= $470,000 / $1,620,000

= 0.29 Times

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